EUR/USD

Key insight

With the ECB hiking for the first time since 2023 and the Fed holding but with three dissents for a hike, both central banks are now leaning hawkish simultaneously — making the policy-divergence trade dead and trapping EUR/USD in a 1.13–1.21 range.

EUR/USD is holding just above the critical 1.1500 round number and the June 16 swing high, with both the Fed and ECB now in parallel hawkish mode — eliminating the rate-divergence signal typically needed to drive a sustained trend move.

Main risk

Fed September Rate Hike Repricing (65% probability priced)

If August US jobs or CPI data surprise to the upside, markets will aggressively price a Fed September hike, strengthening the USD and potentially cracking EUR/USD below the 1.1400 key support.