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EUR/USD Holds Near 1.1550 as Dollar Pressure Builds

EUR/USD traded higher on Wednesday as softer US labor-market signals and easing inflation concerns continued to weigh on the US Dollar. The pair was last seen around 1.1554, while the DXY hovered near 99.70, keeping the euro’s short-term recovery intact.

Market chart and macro headlines for EURUSD this week

Why the Euro Is Finding Support

The latest move in EUR/USD was driven by weaker-than-expected US ADP employment data, which showed July private payrolls rising by 44K versus expectations of 70K. That slowdown, combined with a softer ISM Services employment reading, reinforced the view that US hiring conditions are cooling.

Markets responded by trimming expectations for additional Fed tightening, with the probability of a September rate hike easing to about 56% from 67% the day before. In this environment, the euro has benefited from a weaker dollar and improving short-term momentum. For a broader policy context, see rate differentials.

Oil Prices and the Strait of Hormuz Matter Too

Lower oil prices have also helped reduce near-term inflation fears. News that the US, Iran, and Oman are reportedly close to an interim agreement that could reopen the Strait of Hormuz added to the pressure on crude and, by extension, on inflation-sensitive dollar pricing. Related coverage on Hormuz tensions shows how oil can influence EUR/USD.

For EUR/USD traders, that matters because softer oil can ease broader US inflation risks, even though inflation still remains above the Fed’s 2% target. The result is a more cautious market tone toward the dollar rather than a clean trend reversal.

Technical Picture: Recovery Intact, but Resistance Remains

From a technical standpoint, Scotiabank said the euro’s recovery remains in the 1.1500–1.1600 range, with momentum turning bullish after the pair broke above the 50-day moving average at 1.1476. Near-term resistance is seen around 1.1550, while the 200-day moving average near 1.1630 is the next major level to watch.

That means EUR/USD still needs confirmation before the rally can extend decisively. A sustained break above 1.1550 could open the door to a test of 1.1600, but a failure to hold gains may send the pair back into its recent consolidation band.

What Traders Should Watch Next

The biggest near-term catalyst is Friday’s US Nonfarm Payrolls report, ideally during the London-New York overlap when volatility is often strongest. A stronger-than-expected reading could revive Fed hike expectations and support the dollar, while another soft labor print would likely keep pressure on USD bulls and support the euro.

In the broader FX market, the same macro forces are also influencing other pairs such as AUD/USD and USD/JPY, showing that this is not just a euro story. For more on the theme, see Fed hawkishness and how it can move the pair.

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