The EUR/USD pair holds steady above 1.1550 as the US Dollar Index (DXY) dips below 98.00. The Eurozone experienced a slower wage growth rate, while the Empire State Manufacturing Index dropped to -16.0 in June from -9.2 in May, enhancing pressure on the Dollar.

Amid reduced market anxiety, EUR/USD has rebounded from a risk-off dip linked to geopolitical tensions. The pair shows a daily gain of about 0.70%, trading close to 1.1594, slightly below last week’s high of 1.1631, the strongest since October 2021.

Currency Index Movements

The US Dollar Index, measuring the Dollar against six major currencies, drifts to around 97.75, its lowest in three years. Meanwhile, Eurozone wages grew by 3.4% year-on-year, marking the slowest pace since 2022, providing the European Central Bank with some leeway in policy approach.

With ongoing economic uncertainties, the ECB’s Joachim Nagel adopted a cautious stance, mentioning potential rate changes in light of geopolitical risks. Market focus now turns to the upcoming US retail sales data and Fed’s policy decision, alongside Eurozone inflation figures and ECB official remarks.

The heat map indicates currency changes, with the Euro showing a 0.46% rise against the US Dollar today.

We’ve seen a firm hold in the EUR/USD pair just above the 1.1550 mark, driven largely by a slip in the US Dollar Index (DXY), now languishing below 98.00 — around 97.75, to be precise, which is its weakest showing in roughly three years. The primary momentum isn’t stemming from one side alone; instead, it’s the dual effects of a softening in US business indicators and moderated wage pressures in the Eurozone. The slowdown in pay increases—annual growth at 3.4%—hasn’t been this subdued since early 2022, which subtly reshapes expectations around the European Central Bank’s trajectory.

There’s no question that recent manufacturing data from the US, particularly from New York state, remain unhelpful for Dollar strength. A sharp drop in the Empire State Manufacturing Index to -16.0 from May’s already negative -9.2 underscores a deeper slump in production confidence. This downturn, viewed alongside dipping DXY, is a near-textbook backdrop for the Euro to stretch higher. The fact that EUR/USD has climbed approximately 0.70% and is trading near 1.1594 points towards a fairly convincing demand for the Euro, even if not dramatically exuberant. That level remains just shy of the recent peak at 1.1631.

Key Data Watch

From our perspective, what matters now isn’t solely the spot level but how positioning around it responds to the upcoming sequence of data. We’re watching for US retail figures and, more importantly, any clear signal from Federal Reserve policymakers in the days ahead. It’s fair to say the Fed has kept traders guessing, and with economic prints sending mixed messages, every word from Powell carries increased weight. Tighter scrutiny is warranted.

Across the Atlantic, traders are parsing remarks by Nagel, who has avoided firm commitments while warning of external risks. That hesitancy, matched with the drop-off in wage momentum, allows more room for gradualism from the ECB without running into inflation concerns. If Eurozone inflation data echo that slower pace, it’s likely the ECB can continue on its path without needing sharp corrective measures.

In the heat map, the Euro’s gain—up 0.46% against the Dollar—sits well with the broader theme of moderate risk recovery. Importantly, this rise is not the result of a single event. It comes from a build-up of conditions that reduce downside in the Euro, even if upside may continue to face horizontal resistance near recent highs.

From a tactical perspective, we should prepare to scale sensitivity to data inputs over the next two weeks. Volatility might remain subdued on the surface but can be misleading at inflection points like the current one. Option traders especially may look to reposition or trim deltas if pricing dislocation tightens, especially in short-dated EUR/USD structures. Directional bias remains tilted toward renewed testing of 1.1630, but only under confirmation from upcoming macro prints.

You’ll want to keep your models receptive—not reactive—and look for conviction in broader flows before leaning into either side of the trade. The combination of ECB patience and deteriorating US fundamentals hasn’t yet reached full expression in price action, and there’s still time for that narrative to gather pace.

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