Insights 
VT 
Key Points
- EURUSD rebounded toward $1.17 after slipping to a one-month low last week.
- Dollar selling intensified amid concerns over pressure on the Federal Reserve.
The euro climbed back toward the $1.17 handle, recovering from a one-month low recorded last week. EURUSD traded around 1.168, as traders pared dollar exposure amid growing unease over the perceived independence of the Federal Reserve.
The move reflected a shift in sentiment rather than a sudden improvement in eurozone fundamentals.
Dollar selling gathered pace after comments from Fed Chair Jerome Powell revived concerns about political pressure on US monetary policy.
Fed Independence Comes Under Scrutiny
Jerome Powell said on Sunday that the US Justice Department subpoenaed the Fed on Friday over cost overruns linked to its headquarters renovation. Powell described the probe as a pretext tied to President Trump’s efforts to pressure the central bank into cutting interest rates.
These remarks unsettled markets and weighed on the dollar, as traders reassessed institutional risks in the US. Confidence in the Fed’s ability to act without political interference remains a core pillar for dollar demand, and any doubt in that framework tends to favour alternative currencies such as the euro.
Data Watch Shapes Near-Term Direction
Attention now turns to key macro releases later this week. Germany’s 2025 GDP figures will provide insight into the eurozone’s growth momentum, while US consumer price inflation data will help refine expectations around the Fed’s rate path.
Last week’s softer-than-expected eurozone CPI reduced market conviction around an interest rate hike by the European Central Bank this year. That backdrop limits the upside for the euro, even as the dollar faces its own headwinds.
Technical Analysis
EUR/USD continues to drift sideways within a wide consolidation band, with price action capped near the 1.19 region and supported around 1.137.
The recent dip below the short-term moving averages shows fading bullish momentum, and the pair is now hovering precariously near the 30-day MA.
MACD momentum has flipped bearish, with the signal line curling downward and histogram bars back in the red. Unless the pair reclaims above 1.175 quickly, bulls may lose control, opening the door to a deeper retracement.
A decisive break below 1.160 could confirm downside bias, while 1.180 remains short-term resistance.
Cautious Outlook Ahead of Key Events
EURUSD is likely to remain sensitive to US political and inflation developments in the near term. Ongoing concerns around Fed independence may continue to cap dollar recoveries, but weaker eurozone inflation limits how far the single currency can run.
For now, the pair appears set to trade reactively around incoming data, with volatility risks skewed toward upcoming US CPI and European growth signals rather than a decisive trend shift.
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