EURUSD
forecast & analysis

Underlying trend:

Cautious upside bias — ECB June hike fully priced for the first time since May 4; pair may have found a near-term floor but USD resilience caps the move.

Last week's key drivers:

• Traders are now fully pricing a 25 basis point ECB June hike for the first time since May 4 — a meaningful shift providing EUR with a structural floor
• ECB's Schnabel stating "a rate hike in June will be needed" was the key catalyst

This week (Mon–Fri preview):

• Monday: Final eurozone manufacturing PMI (51.4 expected); ISM manufacturing and prices paid (85 expected) — hot US readings would reassert USD strength
• Tuesday: Eurozone CPI flash — headline expected at 3.2% from 3.0%; core at 2.4% from 2.2%. The most important EUR release of the week — a beat cements the June hike and supports the pair
• Wednesday: Final eurozone and US services PMIs; ADP employment (120k); ISM Services (53.7 expected). Eurozone composite PMI seen at 47.5 — persistent contraction would weigh on EUR
• Friday: Eurozone Q1 GDP final (0.1% QoQ expected); US non-farm payrolls (93k expected, unemployment 4.3%) — the week's dominant USD event

Key risks:

• Hot eurozone CPI Tuesday — especially a core beat — is the most significant near-term EUR positive, cementing the June hike case
• US payrolls Friday below the already-weak 93k consensus would be the most EUR/USD supportive outcome — deepens Fed stagflation paralysis and extends USD weakness
• Persistent eurozone composite PMI contraction Wednesday (47.5 expected) undermines the growth side of the ECB hike argument
• A payrolls beat reasserts USD strength and tests near-term support

Most likely direction:

Cautious upside bias near-term as the ECB hike is priced and the pair looks oversold — eurozone CPI Tuesday and US payrolls Friday are the defining events of the week.

Underlying trend:

Bearish bias — USD strength on higher-for-longer expectations dominating despite ECB June hike signals; the pair sitting at a technically sensitive level.

Last week's key drivers:

• The pair remains under pressure as USD strength driven by persistent US inflation concerns outweighs the support from ECB hawkishness
• ECB's Schnabel stated "a rate hike in June will be needed" — a clear bullish signal for EUR, but insufficient to offset USD haven and rate support
• The interest rate gap between the US and Germany has narrowed back to pre-Iran conflict levels, reducing EUR's relative appeal

This week (Mon–Fri preview):

• Wednesday: US PCE — the defining event for this pair this week. A hot reading strengthens USD and tests key support; a miss provides EUR with temporary relief. Eurozone economic confidence also prints

Key risks:

• Hot US PCE Wednesday is the single most important release — an upside surprise drives USD strength and puts key support around 1.16 under serious pressure
• Weak Eurozone confidence data Wednesday undermines the ECB hike narrative and removes a key EUR support pillar
• The pair has shown a bearish tone — any break of current support risks accelerating toward 1.15

Most likely direction:

Modest bearish bias. USD strength is the dominant force — PCE Wednesday is the key near-term swing factor, with Eurozone CPI the following Monday the next meaningful catalyst.