EUR/USD

Key insight

The ECB's July hold with a September hike signal was a 'buy the rumour, sell the fact' catalyst — EUR/USD has now slipped to near its June 2026 one-year low of 1.1325, and Bank of America targets 1.12 by end-Q3.

EUR/USD is trading below the key 1.1400 round number and the EMA200 at ~1.1434, having broken down after the ECB held rates unchanged and signaled a September hike — a move already priced by markets — while the Fed-ECB rate differential of ~135 bps remains firmly in the dollar's favour.

Main risk

ECB September Rate Hike Re-pricing

If August Eurozone CPI comes in hotter than expected, markets could aggressively reprice ECB tightening beyond September, sending EUR/USD back above 1.1480 resistance and squeezing short positioning.