EUR\/USD rose on Friday as the US Dollar weakened, trading at 1.1742 and close to the week\u2019s high of 1.1755. USD\/JPY fell by nearly 200 pips within seconds in thin Labour Day trading, after alleged Japanese intervention for a second time in two days.<\/p>\n
The move pushed the Dollar lower across markets and helped EUR\/USD recover from Thursday\u2019s low at 1.1655. Attention remained on Eurozone inflation data and the European Central Bank keeping rates unchanged while signalling a possible near-term rise.<\/p>\n
Bundesbank president Joachim Nagel said the baseline scenario involves tighter monetary policy and referred to a possible rate rise in June. In geopolitics, the Strait of Hormuz entered its third month of blockade, with no stated plan to reopen it.<\/p>\n
Oil stayed above $100, with Brent at $113.94. This level increases energy costs for Eurozone crude importers.<\/p>\n
EUR\/USD stayed within a broad 100-pip band, with support above 1.1650 and resistance below 1.1750. On the 4-hour chart, RSI reached 60 and MACD showed a widening green histogram.<\/p>\n
Resistance levels include 1.1755, then about 1.1790, and the area below 1.1850. Supports sit between 1.1675 and about 1.1645, then 1.1580, and near 1.1500.<\/p>\n
We remember this time last year, in spring 2025, when EUR\/USD was testing the 1.1755 level on the back of a hawkish European Central Bank. The geopolitical situation was tense, with Brent crude above $113 a barrel due to the Hormuz blockade, creating significant headwinds. This set a very different stage compared to where we are now.<\/p>\n
Today, on May 1, 2026, the picture is markedly different, with the pair trading much lower around 1.0830. The interest rate differential is a key factor, as the Federal Reserve’s rate stands at 5.50% while the ECB’s is a full percentage point lower at 4.50%. This divergence helps explain why the dollar has regained its footing since the events of last year.<\/p>\n
With Eurozone inflation having cooled to 2.4% as of April 2026, the ECB’s hawkish tone from 2025 has softened considerably, and markets are now pricing in potential rate cuts later this year. US inflation remains stickier at 3.5%, suggesting the Fed may hold rates higher for longer. This policy divergence is a strong bearish signal for the euro.<\/p>\n
Given this clearer policy divergence, implied volatility for EUR\/USD options has receded from the highs seen during the geopolitical turmoil of 2025. Traders might consider strategies that benefit from a range-bound or slowly declining market, such as selling out-of-the-money call options to collect premium. Buying puts could also be a straightforward way to position for a further slide towards the 1.0700 level.<\/p>\n
The technical resistance near 1.1755 that was so critical last year is now a distant memory, with sellers currently focused on defending the 1.0900 psychological level. The resolution of the Hormuz blockade has also provided relief, as Brent crude now trades at a much more manageable $88 per barrel. This has eased a major source of stagflationary pressure on the European economy, but the focus has clearly shifted to interest rate differentials.<\/p>\n
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