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EUR/USD Holds Near 1.1380 as ECB and Fed Signals Pull in Opposite Directions

EUR/USD extended gains for a second day and traded near 1.1380 in Asian hours, supported by fresh hawkish comments from ECB policymaker Isabel Schnabel. At the same time, stronger US inflation readings kept the US Dollar from losing too much ground, leaving the pair in a mixed short-term setup.

Market chart and macro headlines for EUR/USD this week

Why the Euro Is Holding Up

The main bullish input for the euro came from the ECB side. Schnabel said the tightening cycle is not over and that further rate hikes may still be needed to bring inflation back toward the ECB’s 2% target. That message gave EUR/USD enough support to extend higher, even though the broader backdrop remains uneven.

Recent price action also shows the pair still dealing with resistance. EUR/USD remains below the 100-period SMA on the 4-hour chart, and repeated failures to build traction above that level suggest the upside is still fragile. Technical momentum has improved only modestly, so the current rebound is not yet a confirmed trend reversal.

What Is Limiting the Rally

The US side of the equation is still a headwind for a sustained euro breakout. Core PCE inflation rose to 3.4% year-over-year, the highest since October 2023, which supports a firmer USD backdrop and keeps the market alert to hawkish Fed pricing. US inflation data remains a key driver for the dollar, especially when traders are reassessing how long rates may stay elevated.

That tension explains why EUR/USD has moved up, but not decisively higher. Mixed ECB messaging can cap further gains, while a stronger-than-expected US data flow could quickly reverse the pair’s progress. For now, the market appears to be balancing a hawkish ECB against a still-resilient US inflation story.

Key Levels Traders Are Watching

Near term, immediate resistance is seen at 1.1440, followed by 1.1514 at the 100-period SMA. A clear break above that zone would help ease the bearish technical tone and open the door to a more meaningful correction higher. Until then, the pair remains vulnerable to fresh lows if momentum fades.

If EUR/USD fails to reclaim 1.1440 and 1.1514, the latest rebound could be treated as a selling opportunity. On the other hand, reduced pressure from US rate-hike expectations may support short-term stabilization, particularly if incoming US data softens.

Event Risk Later Today

Markets will also watch the University of Michigan Consumer Sentiment Index and the related inflation expectation readings due later today at 14:00 UTC. The consensus stands at 48.9 for sentiment, 49.3 for expectations, 4.6% for one-year inflation expectations, and 3.4% for five-year inflation expectations. A surprise in either direction could trigger a short-term USD reaction and reshape the EUR/USD intraday outlook.

Trading Takeaway

EUR/USD is trying to stabilize, but the pair still needs a clean break above nearby resistance before bulls can claim control. For retail traders following forex trading setups, this is a market where patience matters more than chasing momentum. If you use an automated trading approach or an AI trading bot, keep risk controls tight and wait for confirmation rather than assuming the rebound will extend.