EUR/USD remained under pressure after the European Central Bank (ECB) left its key interest rates unchanged on Thursday, in line with market expectations. At its July meeting, the ECB kept the main refinancing rate at 2.40%, the marginal lending facility rate at 2.65%, and the deposit facility rate at 2.25%.
In its policy statement, the ECB noted that energy price forecasts remain highly volatile and that the full impact of the recent energy shock has yet to be reflected in the economy. The central bank reiterated that monetary policy decisions will continue to be made on a meeting-by-meeting basis, taking into account incoming economic data, inflation projections, and the strength of monetary policy transmission. The ECB also emphasized that it is not pre-committing to any specific interest rate path.
Despite the unchanged policy stance, the euro continues to weaken against the US dollar. The greenback is benefiting from renewed safe-haven demand amid escalating geopolitical tensions in the Middle East. The United States has now carried out airstrikes on Iran for the twelfth consecutive night, while Tehran has responded with attacks on US military bases in Jordan and Bahrain.
At the same time, tensions in global energy markets continue to intensify. Disruptions in the Strait of Hormuz, combined with attacks by Yemen's Houthi movement on two Saudi oil tankers in the Red Sea, have heightened concerns over shipping through the Bab el-Mandeb Strait. Against this backdrop, US West Texas Intermediate (WTI) crude oil prices have climbed to their highest level in a month.
The sharp rise in energy prices has fueled concerns about inflation in the United States and strengthened expectations that the Federal Reserve may need to tighten monetary policy further. According to the CME FedWatch Tool, markets are now pricing in a 78% probability of an interest rate hike at the September meeting, up from 52% a week ago.
The US dollar has also drawn support from comments by US Secretary of State Marco Rubio, who warned that military operations against Iran could intensify if Tehran continues to reject negotiations and urged the Houthis to halt their attacks. Elevated geopolitical uncertainty continues to drive safe-haven inflows into the US dollar, limiting the potential for a sustained recovery in EUR/USD.
Technical Outlook
From a technical perspective, EUR/USD remains under selling pressure. A sustained break below the 1.1370-1.1353 support level would accelerate the decline toward the July low.
Conversely, if the pair regains the 1.1400 psychological level and moves above the 20-day Simple Moving Average (SMA), bulls would have an opportunity to extend the recovery.
For now, however, momentum indicators remain in negative territory, suggesting that sellers retain the near-term advantage.
The table below shows the euro's percentage change against the major currencies today. The euro posted its strongest performance against the New Zealand dollar.
