EUR/USD Extends Losses as Strong Dollar Pressure Meets Mixed ECB Signals

The EUR/USD pair continues to trade under pressure as rising U.S. Treasury yields and increasing expectations of a more aggressive Federal Reserve strengthen the U.S. Dollar. At the same time, the Euro is receiving mixed support from European Central Bank comments, creating a situation where both currencies have bullish drivers, but the dollar currently appears stronger fundamentally.

On the Euro side, recent inflation data showed that price pressures remain elevated across the eurozone. Final April CPI remained at 3.0% year-on-year, confirming that inflation is still sitting well above the ECB’s target level. This keeps pressure on policymakers as they continue balancing inflation risks against slowing economic growth. 

ECB policymaker Pierre Wunsch recently warned that Europe may only be at the beginning of a new inflation problem, suggesting that the central bank may eventually have to react if price pressures continue rising. His comments reflect increasing concern that higher energy costs and geopolitical risks could create more persistent inflation across the region. 

However, there is still uncertainty inside the ECB. Incoming policymaker Emmanuel Moulin stated that it remains too early to determine whether action will be needed at the June meeting and emphasized that policymakers should continue closely monitoring incoming data. 

The U.S. side currently appears to be providing stronger support for the dollar.

Recent inflation data and resilient economic conditions have caused markets to reduce expectations for rate cuts and even consider the possibility of further tightening if inflation continues accelerating. Treasury yields have pushed higher, supporting demand for the U.S. Dollar across the board. 

Because of this, EUR/USD has continued moving lower as traders increasingly price a stronger dollar environment.

EUR/USD Technical Outlook

Based on the 4-hour chart structure, EUR/USD remains under selling pressure and continues trading inside a broader descending channel.

The pair recently broke below previous support zones and has been making lower highs and lower lows, showing that short-term momentum still favors sellers.

A few notable observations from the chart:

• Price is testing an important support zone around the 1.1580–1.1600 region
• RSI is near oversold territory and showing a small bullish divergence
• Selling momentum appears to be slowing slightly
• The broader trend structure still remains bearish

The RSI divergence could create a temporary rebound, but the larger trend remains weak unless buyers regain higher resistance levels.

If support around current levels fails, the next major downside area may come near:

• 1.1550
• 1.1450 support zone

On the upside, buyers would likely need to reclaim:

• 1.1650
• 1.1700
• 1.1750

before a larger recovery can begin.

Bonuspips View

EUR/USD currently finds itself caught between a potentially more hawkish ECB and an already stronger U.S. Dollar.

The difference is that the market appears to have greater confidence in the Fed's ability to keep rates elevated than in the ECB becoming aggressively hawkish. That is keeping pressure on the Euro.

The short-term outlook remains slightly bearish while price stays below recent resistance levels. However, the RSI divergence on the chart suggests sellers may be losing some momentum, opening the possibility for a temporary corrective bounce before the next larger move develops.

For now, the market continues trading:

Strong USD + higher yields > Euro inflation concerns

Until that balance changes, rallies in EUR/USD may continue attracting sellers.