EUR/USD Breaches 1.1550 on Disappointing Eurozone Data and Fed’s Hawkish Pause

EUR/USD Edges Lower Despite Eurozone Growth Miss and Fed Speculation

EUR/USD dipped below the 1.1555 threshold after euro-area GDP surprised at just 0.1 percent growth in Q2, underscoring Germany’s 0.1 percent contraction and Italy’s similar decline. The single currency’s failure to hold above the 1.1570 mark reflects mounting pressure from underwhelming bloc data, with French consumer spending up 0.6 percent offering scant relief. Traders who witnessed a swift drop to 1.1552 are now probing whether the next support at 1.1500 will give way under renewed dollar demand.

Dollar’s Resilience Backed by U.S. Labor and Inflation Surprises

Robust July nonfarm payrolls—77 000 versus a prior -33 000 reading—combined with a surprisingly strong 2.5 percent advance GDP print, have reinforced expectations that the Federal Reserve will maintain its 4.25–4.50 percent policy rate. FedWatch probabilities for no change stood at nearly 98 percent as of today, while odds of a cut by September fell back to 60 percent from 66 percent before the data releases. The U.S. dollar index’s consolidation above 98.80 reflects this sentiment, drawing EUR/USD further into its descending channel.

Bearish Technical Formation Projects Downside Potential to 1.1450

On the 4-hour chart EUR/USD has broken the ascending trendline from mid-June and now trades beneath both the 50- and 100-period EMAs. The price compression between 1.1550 and 1.1610 resembles a bear-flag pattern, with a measured target near 1.1450 if sellers prevail. RSI sits at 33, flashing negative momentum without yet entering extreme territory. Failure to reclaim the 1.1610–1.1625 band will keep doors open for a retest of the June 23 low at 1.1500, and potentially the psychologically critical 1.1450 level.

Upcoming U.S. Data and Fed Messaging Set to Govern Next Moves

Attention shifts to Q2 Personal Consumption Expenditures and the FOMC statement this afternoon. A softer PCE print could prompt renewed rate-cut expectations and see EUR/USD briefly recover toward the 1.1610 pivot. Yet any hawkish undertone from Chairman Powell will likely propel the pair back under 1.1550. Later this week, August Nonfarm Payrolls and lingering tariff uncertainty between Washington and Beijing add further layers of volatility to the cross.

Market Positioning and Strategic Stance: Sell on Strength

Investors remain net short EUR/USD according to CFTC data, reflecting stretched positioning on the euro side. Until fresh euro-zone growth surprises emerge or the Fed signals a clear dovish shift, the bias remains tilted toward further depreciation. Scaling into short positions near 1.1600 with initial downside targets at 1.1500 and 1.1450 aligns with both technical patterns and macro differentials.

SELL under 1.1550 with a view to 1.1500 and 1.1450

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