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Euro: Complex rate path questions for EUR – Commerzbank

Commerzbank’s Thu Lan Nguyen notes the European Central Bank sounded slightly hawkish, but investors already price in two further hikes, leaving the Euro softer after President Lagarde avoided clear guidance. Nguyen argues whether hikes come in July or later still matters, as an earlier move would signal urgency, yet markets may see rapid tightening as a policy mistake and price in future cuts, limiting Euro support.

ECB timing debate clouds Euro outlook

“Basically, things turned out just as my colleague Michael had predicted in the morning: in our view the ECB sounded slightly hawkish yesterday. But that was not enough to lure investors out of hiding who are already pricing in two further rate hikes by the end of the year anyway. Accordingly, the euro ultimately edged slightly lower, as President Lagarde avoided sending a clear signal in favour of further rate hikes.”

“This was probably not the main reason for the upward move in EUR/USD over the course of yesterday’s trading – the decisive factor here was US President Trump’s statement that he had called off another military strike against Iran because a deal was virtually in the bag. However, it is likely to have contributed to positive euro sentiment. After all, the discussion shows that a rate hike in July is at least on the table.”

“One might argue: whether the next two rate hikes expected by the market take place in July and September, or in September and December, hardly makes a big difference and is therefore irrelevant for the euro. But it is not quite that simple. A second rate hike as early as July would suggest a certain urgency behind the tightening and would therefore have a somewhat hawkish flavour.”

“If the market shares this view, it is likely to price in a rapid correction in rates downwards at the long end, which would dilute – if not completely negate – the positive effect of the rate hike for the euro. So: the debate about the timing of the next rate hike is by no means irrelevant. The situation is more complex than it appears at first glance

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Germany’s final Harmonized Index of Consumer Prices for May remains at 2.7% YoY: What it means for EUR/USD?

Germany’s final Harmonized Index of Consumer Prices (HICP) data for May has arrived at 2.7% Year-on-Year (YoY), as the preliminary data showed. The inflation data cooled down from 2.9% in April. On a monthly basis, it is confirmed that the German HICP growth declined by 0.1%.

There is a slight recovery move in the EUR/USD data, following the German final HICP data release; however, it appears that the move has come due to a slight correction in the US Dollar (USD). Still, the major currency pair is down 0.15% to near 1.1560.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.10%0.06%0.19%0.06%0.20%0.29%0.13%
EUR-0.10%-0.05%0.09%-0.04%0.11%0.19%0.02%
GBP-0.06%0.05%0.15%0.01%0.12%0.23%0.08%
JPY-0.19%-0.09%-0.15%-0.15%-0.01%0.08%-0.08%
CAD-0.06%0.04%-0.01%0.15%0.14%0.22%0.07%
AUD-0.20%-0.11%-0.12%0.01%-0.14%0.07%-0.08%
NZD-0.29%-0.19%-0.23%-0.08%-0.22%-0.07%-0.14%
CHF-0.13%-0.02%-0.08%0.08%-0.07%0.08%0.14%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

What do Germany’s final HICP data mean for EUR/USD?

The impact of Germany’s final HICP data remains little on EUR/USD, unless there is a dramatic deviation. The major trigger for the major currency pair remains preliminary readings.

Meanwhile, the European Central Bank’s (ECB) monetary policy announcement on Thursday, in which it raised the Deposit Facility rate by 25 basis points (bps) to 2.25%, signaled that policymakers remained highly concerned about upside inflation risks due to elevated energy prices in the wake of Middle East conflicts.

ECB President Christine Lagarde said in the press conference, post the monetary policy announcement, “Short-term inflation expectations have risen,” and the central bank will “monitor size, persistence of energy price increase”.

Technical Analysis:

EUR/USD trades lower at around 1.1560, keeping a bearish bias as spot holds beneath the 20-period Exponential Moving Average (EMA) at 1.1603 and the broader downtrend resistance line near 1.1687. The pair is still riding an underlying ascending support structure from 1.1503, but the latest Relative Strength Index (14) reading around 42 suggests sellers retain the near-term initiative while any rebounds are likely to struggle against overhead supply.

On the topside, initial resistance is located at the 20-period EMA around 1.1603, with the descending trend-line resistance at 1.1687 acting as the next barrier if buyers manage a clearer bounce. On the downside, the first key support emerges at the rising trend-line break level near 1.1503; a daily close below this floor would expose it to the March 13 low at 1.1411.

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EUR/JPY Price – Strengthens above 185.00, while bullish trend eyes consolidation

  • EUR/JPY gains ground to around 185.20 in Wednesday’s early European session.
  • Likelihood of hawkish stance hikes from the ECB supports the Euro.
  • The cross keeps the bullish vibe, but consolidation cannot be ruled out in near term with neutral RSI momentum.
  • The first upside barrier emerges at 186.05; the initial support level is located at 185.15.

The EUR/JPY cross gathers strength to near 185.20 during the early European session on Wednesday. The Euro (EUR) edges higher against the Japanese Yen (JPY) amid expectations that the European Central Bank (ECB) would raise rates at its June policy meeting on Thursday.

The ECB is set to raise its key interest rate for the first time in almost three years on Thursday, becoming the first of its peers to tighten policy in response to a jump in energy prices caused by the conflict in the Middle East. While money markets are already pricing in a second 25 basis points (bps) hike for September, economists expect the ECB to maintain a “gently hawkish” but highly data-dependent tone without pre-committing to a fixed path.

“Lagarde may provide some indication of the ECB’s next move after she muddled communication on the rate outlook in March. We expect her to be clearer than in the past that a second hike may be in the pipeline,” said Simona Delle Chiaie, chief euro-area economist at Bloomberg. Any hawkish comments from ECB policymakers could lift the EUR against the JPY in the near term.

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY holds a constructive near-term bias as it consolidates just above the Bollinger middle band and remains comfortably over the 100-day simple moving average, suggesting underlying demand on dips. The Relative Strength Index (14) at 49.99 is effectively neutral, hinting at a pause rather than exhaustion after the recent grind higher.

On the topside, the immediate hurdle is the Bollinger upper band near 186.05, where fresh selling interest could emerge. The next hurdle is seen at the February 9 high of 186.24, en route to the January 23 high of 186.88. On the downside, initial support is seen at the Bollinger middle band around 185.15, ahead of the 100-day SMA at 184.50, while a deeper pullback towards the lower Bollinger band near 184.25 would be expected to attract buyers as long as the broader bullish structure is preserved.

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Euro: Safe haven appeal grows with structural boosters – BNP Paribas

BNP Paribas strategists argue that Europe is emerging as an alternative safe haven, with the Euro gaining ground as a global safe asset. They note that the European Central Bank’s (ECB) work highlights stronger demand for Euro assets and a higher convenience yield on German bunds, which supports broader Eurozone financing conditions. They stress Europe’s industrial resilience, services strength, tech momentum and improving policy and geopolitical backdrop.

Euro benefits from haven re-rating

“All this turmoil has already made Europe look more attractive, as a haven of stability.”

“Last week, the ECB’s annual report on The International Role of the Euro revealed that the euro is catching up as the world’s safe asset of choice.”

“On multiple occasions, during recent episodes of market turmoil, the euro behaved more like a safe asset than the US dollar.”

“Financial markets have noticed: the so-called convenience yield[2] on German bunds rose threefold from 30 bps to 90 over 2023-25.”

“To the extent that all other bonds (sovereign and private) in euros are priced off German bunds, this benefits the entire Eurozone economy.”

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Euro remains stronger against Japanese Yen following German Industrial Production data

  • EUR/JPY holds gains as a stronger Euro is supported by robust Germany’s Industrial Production.
  • Germany’s seasonally adjusted industrial output rebounded by 0.4% in April, meeting market expectations and recovering from March’s 0.1% decline.
  • The Japanese Yen steadies as lower oil prices temper energy inflation fears, easing market pressure for aggressive rate hikes.

EUR/JPY extends its gains for the second successive day, trading around 184.90 during the Asian hours on Tuesday. The currency cross holds gains as the Euro (EUR) remains stronger following the release of Industrial Production and Trade Balance data.

Industrial Output, in the Eurozone’s economic powerhouse Germany, rose by 0.4% over the month in April, the federal statistics authority Destatis said in figures adjusted for seasonal and calendar effects, compared with the expected 0.4% rise and a decline of 0.1% recorded in March (revised from -0.7%). Annually, the German Industrial Production came in at -0.5% in the same period, following March’s revised 3.4% fall.

Germany’s trade surplus narrowed to €14.5 billion in April 2026 from an upwardly revised €14.7 billion in March, falling short of market expectations of €15.0 billion. It was the smallest trade surplus since November, as imports grew faster than exports. Exports unexpectedly increased by 0.9% month-on-month to a near 3½-year high of €136.6 billion, accelerating from a downwardly revised 0.3% gain in March and easily beating expectations of a 0.3% decline. Meanwhile, imports climbed 1.2% month-on-month to €122.1 billion, the highest level since November 2022, though easing from a downwardly revised 4.5% increase in March.

The upside for the EUR/JPY cross remains limited as a stabilizing Japanese Yen (JPY) acts as a structural headwind. Recent pullbacks in global oil prices have helped temper fears of a severe energy-driven inflation spike, consequently easing immediate market pressure for hyper-aggressive rate hikes.

However, the Bank of Japan (BoJ) is still widely anticipated to tighten monetary policy later this month. Policymakers continue to grapple with underlying inflationary pressures stemming from historically elevated energy costs. In tandem with potential rate hikes, reports indicate that the BoJ will review its bond-tapering framework, with a high likelihood of scaling back its monthly asset purchases. Market participants are now turning their focus to Wednesday’s 30-year Japanese Government Bond (JGB) auction, which will serve as a key barometer to gauge investor demand within this shifting, higher-yield environment.

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EUR/JPY Price Strengthens above 184.50 with bullish tone despite intervention risks

  • EUR/JPY gathers strength near 184.85 in Tuesday’s early European session. 
  • The cross keeps the bullish vibe, but further consolidation cannot be ruled out in near term with neutral RSI momentum. 
  • The initial support level is seen at 184.50; the immediate resistance level to watch is 185.12. 

The EUR/JPY cross holds positive ground around 184.85 during the early European session on Tuesday. A hawkish stance from the European Central Bank (ECB) underpins the Euro (EUR) against the Japanese Yen (JPY). The ECB will hold its June monetary policy meeting on Thursday. Markets have fully priced in a 25-basis-point (bps) rate hike after Eurozone inflation surged to 3.2%.

Markets are on high alert for foreign exchange intervention from Japanese authorities. This, in turn, might support the JPY and act as a headwind for the cross. Japanese authorities have issued strong verbal warnings, stating that the government is fully prepared to take decisive and appropriate action to protect the domestic currency.

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY holds a constructive bullish bias as spot remains above the 100-day simple moving average (SMA) and the Bollinger band midline. Price also sits comfortably above the lower Bollinger band, suggesting the broader uptrend structure is still intact, while the Relative Strength Index (RSI) at 45.9 leans slightly soft but remains in neutral territory, hinting at consolidative rather than impulsive downside momentum.

On the downside, the initial support zone is formed by the 100-day SMA at 184.50, followed by the lower Bollinger band near 184.20, which should limit deeper pullbacks if the bullish structure is to persist. The first upside barrier emerges at the  the Bollinger band midline at 185.12, en route to the upper boundary of the Bollinger Band at 185.12. Any follow-through buying above this level could pave the way to the 186.00 psychological level. 

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Euro gains ground to near 1.1550 on ECB rate hike bets

  • EUR/USD gains ground to around 1.1545 in Tuesday’s early European session. 
  • The ECB is widely expected to raise its key interest rates at its June policy meeting on Thursday. 
  • Trump said he might have a proposal for the Iran agreement within days. 

The EUR/USD pair gathers strength near 1.1545 during the early European trading hours on Tuesday, bolstered by the hawkish stance of the European Central Bank (ECB). Traders brace for the US Consumer Price Index (CPI) data on Wednesday. On Thursday, all eyes will be on the ECB interest rate decision. 

The ECB is set to raise its key interest rate for the first time in almost three years at the upcoming June policy meeting on Thursday, becoming the first of its peers to tighten policy in response to a jump in energy prices caused by the conflict in the Middle East.

“At its 11 June meeting, the ECB is very likely to raise its key interest rates by 25 basis points, in line with its recent hawkish communication,” said Martin Wolburg, senior economist at Generali Investments.

ECB President Christine Lagarde will hold the press conference to deliver the monetary policy statement and take questions from journalists. Any hawkish comments from ECB policymakers could provide some support to the Euro (EUR) against the Greenback in the near term. 

US President Donald Trump said on Tuesday that he might have a proposal for the Iran agreement within days, per Reuters. However, the uncertainty surrounding the Middle East remains high. Earlier Monday, Israeli Prime Minister Benjamin Netanyahu said that the war against Iran and its Lebanon-based proxy Hezbollah “has not yet ended,” though he insisted both are weaker than ever. Signs of rising tensions in the Middle East could boost the US Dollar (USD) as a safe-haven currency and act as a headwind for the major pair. 

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Trade of The Day – EUR/USD

Facts

  • On Thursday (June 11), the ECB will announce its interest rate decision. Markets have almost fully priced in a rate hike.
  • Nearly two additional rate hikes are priced in for the remaining months of the year (the second one at approx. 73%).
  • On Wednesday (June 10), May CPI inflation data for the United States will be released.
  • The EURUSD pair is oscillating around 1.15500, between two key support levels determined by the 61.8% and 78.6% Fibonacci retracements.
  • The price is trading significantly below its three major moving averages: EMA 50 (1.16568), EMA 100 (1.16608), and EMA 150 (1.16464).
  • The RSI (14) indicator stands at 39.1.

Recommendation

  • Position: Short (SELL) on EURUSD at market price (1.15502).
  • Take Profit (TP): 1.14700 (TP1), 1.14200 (TP2)
  • Stop Loss (SL): 1.16300

Figure 1: EURUSD (10.12.2025 – 25.06.2026)

Source: xStation5, 08.06.2026 (15:34)

Opinion

The EURUSD pair has weakened significantly from its mid-April peak, when it approached the 1.18500 level. The key drivers behind this downward move are the prolonged negotiations between the US and Iran, alongside a substantial increase in market expectations for US interest rate hikes. Markets have now fully priced in a rate increase before the end of the year, following Friday’s release of very strong NFP (Non-Farm Payrolls) data from the US labor market. Figure 2: Change in Non-Farm Payrolls (NFP) and Unemployment Rate in the US (2023 – 2026)

Source: XTB Research, 08.06.2026

Geopolitics and monetary policy should remain the primary focus for investors this week as well. Any headlines suggesting that a breakthrough in reopening the Strait of Hormuz is slipping away could weigh on the EURUSD pair, a dynamic already observed during this morning’s trading session. Paradoxically, the Euro’s decline could also be fueled by Thursday’s anticipated interest rate hike from the ECB. Since this move is already nearly 100% priced in by the markets, investor attention will shift away from the decision itself and onto the accompanying rhetoric. Frankly speaking, if the ECB were to hold rates for any reason, it would trigger a massive sell-off in the Euro. However, the single currency could also be weakened by President Christine Lagarde herself, who will take the podium on Thursday afternoon to address and potentially challenge market assumptions regarding the central bank’s upcoming steps.

Lagarde has rarely accustomed us to being overly transparent or hawkish in her communications. Consequently, any signs of her emphasizing economic stagnation risks could be interpreted by markets as dovish – especially if inflation concerns are given a slightly lower priority than they were a month ago. Speaking of inflation, Wednesday’s US CPI print for May is a crucial milestone. Further growth in price pressures is expected. The core gauge, which excludes highly volatile food and energy prices, will be critical, as it will reveal the extent to which the energy shock has filtered into other sectors of the economy. From a technical analysis perspective: The pair has broken below the 61.8% Fibonacci retracement level (1.15777) as well as the EMA 50, 100, and 150 moving averages, justifying further declines. The MACD histogram is systematically deepening its lows in negative territory, and the RSI (14) still has ample room to slide before hitting oversold territory.

Methodology

The recommendation was prepared based on a fundamental analysis of the respective economies (including monetary policy in both the Eurozone and the US), as well as a technical analysis of the EURUSD chart. The direction of the recommendation was determined by assessing the monetary policy divergence between the Fed and the ECB, confirmed by the medium-term downward trend on the chart. Take Profit and Stop Loss levels were determined using Fibonacci retracements and key horizontal support/resistance levels (TP1 between Fibo 78.6% and Fibo 100.0%, TP2 directly at the Fibo 100.0% level, and the SL at the Fibo 50.0% level).