EUR/USD trades near 1.1475, reaching its lowest level since 23 June amid a fifth consecutive daily decline. The Euro faces pressure due to a robust US Dollar backed by strong US economic data, with the ADP jobs report indicating 104,000 job gains in July, a reversal from the previous month’s contraction.
Concerns regarding the US-EU trade deal, viewed as favourable to Washington, continue to weigh on the Euro. The Federal Reserve’s upcoming policy decision later on Wednesday further holds traders’ attention, contributing to the Euro’s bearish momentum against the Greenback.
Current Market Analysis
The EUR/USD pair remains near its weakest level since June, trading around 1.1475. This week’s over 2.0% decline reflects mounting pressure on the Euro driven by US Dollar strength and expectations that the Federal Reserve will maintain current interest rates.
The bullish momentum for the US Dollar is supported by economic resilience, with a 3.0% annualized GDP growth in Q2 surpassing the 2.4% estimate. Inflation indicators like the core PCE Price Index also played a role, rising 2.5% QoQ, though other figures suggested a trend towards disinflation in the economy.
Eurostat indicated the Eurozone economy grew by 0.1% in Q2, exceeding expectations. The Economic Sentiment Indicator showed minor improvement, with better-than-expected growth in certain Eurozone countries, yet it offered limited relief to the Euro’s performance. Anticipation builds for the Fed’s policy announcement and potential insights into future interest rate changes.
Trader Strategies And Projections
Given the dollar’s momentum, we believe the path of least resistance for EUR/USD is lower in the coming weeks. The clear divergence between robust US growth and sluggish Eurozone performance supports this bearish outlook. The Federal Reserve’s policy announcement later today will be the immediate catalyst for the next move.
We are looking at buying put options on the EUR/USD to capitalize on further declines. This strategy offers a defined-risk way to position for a drop below the recent lows near 1.1475. It is particularly useful ahead of the volatile Fed event, as it protects against an unexpected reversal.
This view is strengthened by recent data, such as last week’s German IFO Business Climate index which fell to 87.3, signaling deepening pessimism in the Eurozone’s largest economy. All eyes will now turn to the US Non-Farm Payrolls report on August 8, 2025, which we expect to confirm the labor market strength seen in the ADP numbers. A strong NFP reading would likely push the pair towards our next target.
We are reminded of the market dynamics back in 2022, when a similar policy divergence between a hawkish Fed and a hesitant ECB sent the EUR/USD below parity for the first time in two decades. While we are not forecasting a move to 1.0000 yet, it serves as a powerful historical precedent for how far the pair can trend under these conditions. The market will be sensitive to any “higher for longer” language from the Fed today.
A decisive break below the 1.1450 support level, which marks the low from early June 2025, would be a strong bearish confirmation for us. Such a move would open the door to a test of the 1.1300 psychological level in August. We would consider adding to bearish positions if we see a daily close below that 1.1450 mark.
