EUR/USD forecast: Currency Pair of the Week | June 26, 2026

The FX markets are bracing for a potentially defining week, after a two-week rally for the dollar on the back of a hawkish Fed.  While one can make a case for a euro comeback amid the recent plunge in oil prices, which could put pressure on the dollar, so far this hasn’t been the case. This is largely due to a hawkish Fed and with the US data remaining largely positive. Therefore, the dollar bears will find it difficult justifying any bold bearish bets just yet. As such, the EUR/USD forecast will only turn positive when we see a run of negative US data releases to suggest the Fed will not hike rates after all.

 

For this week, a packed economic calendar is likely to dictate the direction of currency markets over the coming days. US employment data remains the key event, with a headline payrolls print around the 115,000 mark expected. One has to wonder however how much of the recent hawkishness surrounding the dollar is already reflected in prices. I think there is still at least some room for fresh gains. In Europe, attention turns to the ECB’s annual Sintra gathering, although policymakers are unlikely to soften their rhetoric ahead of crucial inflation releases from around the eurozone this week.

 

EUR/USD forecast: dollar needs strong data to extend gains

 

Following renewed tensions between the US and Iran, financial markets have responded with surprising composure. Oil prices have struggled to sustain any meaningful rally, suggesting traders still believe the conflict will remain contained rather than evolve into a broader regional disruption again. That optimism could quickly fade if shipping through the Strait of Hormuz comes under threat, but for now that is not being priced in by markets.

 

The dollar rally has lost some momentum. Markets will probably require another round of firm US economic data to justify renewed buying. The week’s data releases arrive in rapid succession. Consumer confidence, JOLTS job openings, ADP employment and the ISM manufacturing survey will all help shape expectations before Thursday’s non-farm payrolls report. Analysts expect payroll growth of around 115,000 in June while the unemployment rate is seen steady at 4.3%.

 

A figure in that region or higher should reinforce expectations that the Fed will hike, although it is unlikely to convince investors that multiple hikes will be on the way.

 

ECB likely to keep a steady message with inflation data in focus

 

The ECB’s annual forum in Sintra begins this week, providing policymakers with another opportunity to communicate their outlook. Although previous gatherings have occasionally delivered important policy signals, this year’s meeting is unlikely to produce any meaningful shift in tone.

 

ECB President Christine Lagarde has recently acknowledged growing confidence in the inflation outlook. With June inflation figures due shortly after the conference begins, there should be little incentive for the ECB to signal any change in direction prematurely.

 

Analysts’ expectations are for headline inflation to edge slightly lower to 3.0% from 3.2% previously, while core inflation is projected at 2.5%, unchanged from the previous reading. Such an outcome would reinforce the view that disinflation is progressing only gradually, supporting the case for policymakers to retain a relatively firm stance over the coming months.

 

But if we see a more hawkish message from Sintra, then this should offer the euro some support, even if broader moves continue to be driven by the dollar side of the equation.

 

Technical EUR/USD forecast

 

 

Lower lows and lower highs are what stand out from the chart of the EUR/USD. This is a clear bearish pattern, reinforced by the moving averages also pointing lower. Key resistance is around 1.1410-15 area which marks the low from March. Above this zone, 1.1480-1.1500 is the next resistance zone. There’s are no obvious support levels so watch the round handles like 1.1300 should the selling pressure resume. Unless we see a clear reversal pattern, any short-term bounces should be taken with a pinch of salt. The EUR/USD forecast remains bearish from a technical standpoint for now.

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R