EUR/USD

Key insight

The ECB-Fed policy convergence trade is the dominant theme: markets now fully price two more ECB hikes to 2.75% by early 2027, narrowing the rate differential that has long weighed on EUR, but the Fed's 65% September hike probability is the critical counterweight that keeps EUR bulls in check.

EUR/USD is capped below the key 1.1550 resistance (mid-July swing high) while holding above 1.1480 session support, caught between ECB hawkishness and a Fed that kept rates at 3.75% with three dissenting hike votes — creating a near-term standoff.

Main risk

Fed September Rate Hike (65% Probability)

Three FOMC dissenters already voted to hike at the July 29 meeting, and if US CPI for July (due mid-August) prints hot again, a September Fed hike would reignite USD strength and push EUR/USD back toward the 1.1280 key support.