HG MARKETS:

The EUR/USD pair remains under pressure, hovering near one-month lows and poised for its first monthly decline since December, as a sharp two-day sell-off overshadows mildly positive Eurozone GDP data. The Euro’s modest rebound in Asian trading failed to hold, with the pair drifting back toward 1.1550, reflecting persistent concerns over the recent US–Eurozone trade accord and its implications for regional economic asymmetry.

Market participants adopt a cautiously optimistic stance ahead of the Federal Reserve’s policy decision, with rates expected to remain unchanged. Attention is squarely on Chair Jerome Powell’s commentary for indications of future easing, particularly in light of mounting political pressure from President Trump, which has raised broader concerns over the central bank’s independence.

Eurozone macroeconomic indicators offered modest upside surprises, with Q2 GDP expanding by 0.1% and retail activity in Germany and France surpassing expectations. Nonetheless, these data points have failed to materially support the Euro, as structural fragilities and geopolitical uncertainty continue to weigh on investor sentiment. Concurrently, USD strength persists, buoyed by stable trade rhetoric and expectations of prolonged détente with China.

Further divergence in economic trajectories was evident as Germany’s Q2 contraction aligned with forecasts, while US data suggested robust consumer sentiment and labor market resilience, despite softer JOLTS figures. The Dollar’s pullback post-data was limited, as optimism around upcoming Q2 GDP estimates—projected at 2.4% annualized—reinforced its safe-haven appeal.

Technically, EUR/USD remains in a bearish formation, with recoveries repeatedly capped near 1.1575. Short-term rebounds may occur amid profit-taking and an improving RSI, though resistance lies at 1.1600 and 1.1700. On the downside, a breach of 1.1520 and 1.1500 could expose the pair to June’s multi-session lows near 1.1450, deepening the prevailing downward bias.