What Happened
Societe Generale economists have downgraded Eurozone 2026 GDP growth forecasts by a larger margin than equivalent US projections, reinforcing the view that the US economy will continue to outperform Europe. The EUR/USD pair has been pressured as a result, recently trading near 1.0870, retreating from the recent high of 1.1275 hit in late April 2025.
Key Levels — EUR/USD
- Support 1: 1.0800 — round-number psychological floor and recent consolidation zone
- Support 2: 1.0650 — major structural support from Q1 2025 lows
- Resistance 1: 1.0950 — short-term overhead resistance and 50-day moving average cluster
- Resistance 2: 1.1100 — key technical ceiling from prior consolidation in March–April
Technical Picture
EUR/USD is in a short-term downtrend after failing to hold above the 1.10 handle. The pair is trading below its 20-day moving average (~1.0940), which is now acting as resistance. RSI sits near 42, approaching oversold territory but not yet signalling a reversal. The broader trend since the April highs is bearish.
What Traders Are Watching
Australian traders should monitor two key triggers: a daily close below 1.0800 would likely accelerate USD strength, pressuring Gold (XAU/USD) — currently near $3,220/oz — and weighing on AUD/USD. Conversely, a recovery above 1.0950 would ease USD pressure and could support commodity prices. BHP and RIO on the ASX are sensitive to USD moves via iron ore pricing, currently around $103/tonne.
Bias — Bearish EUR/USD (Neutral-to-Bullish USD)
Bearish on EUR/USD. Wider growth divergence between the US and Eurozone gives the US dollar a fundamental tailwind. Until Eurozone data surprises to the upside, rallies in EUR/USD are likely to be sold. This supports a firmer USD environment, which Australian traders should factor into commodity and ASX resource stock positioning.
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