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EUR/USD Rebounds as the Dollar Loses Momentum

EUR/USD regained ground after dipping earlier in the session, with softer US economic data and easing geopolitical stress helping the euro recover against the dollar. The pair moved back toward 1.1655 after an intraday low near 1.1586, as traders reassessed the outlook for Fed policy and near-term dollar strength.

Market chart and macro headlines for EUR/USD this week

The move came as US Core PCE rose 0.2% month over month in April, below expectations and slower than March’s 0.3% pace. At the same time, US Q1 2026 GDP was revised down to 1.6% annualized from the initial 2.0% estimate, adding to signs that growth is cooling even while inflation remains above target.

Why the Dollar Weakened

The data release reduced some immediate demand for the greenback, especially after the US Dollar Index eased from earlier highs. The combination of slower growth and a softer monthly inflation reading gave markets room to price a less aggressive Fed path, even though several officials continue to signal caution on inflation.

Fed Commentary Still Supports a Higher-for-Longer Bias

St. Louis Fed’s Musalem said he would be concerned if disinflation does not reappear over the next one to two quarters and warned that inflation risks still deserve close attention. That keeps the policy debate alive: while weaker data can pressure USD in the short term, Fed speakers are not yet signaling a clear pivot to easing.

For traders using a Forex Trading Bot or broader automated trading tools, this kind of environment can be especially important because headline-driven moves may continue to dominate EUR/USD price action.

Geopolitics Also Helped Risk Sentiment

Axios reported that US and Iranian negotiators reached a 60-day memorandum of understanding to extend the ceasefire and begin talks on Iran’s nuclear program, although final approval is still pending. The headline helped lift risk sentiment and contributed to the dollar’s intraday pullback, while crude oil and gold remained sensitive to the same geopolitical backdrop.

What Traders Should Watch Next

The key risk for EUR/USD is that the agreement remains unconfirmed. If approval is delayed or rejected, the dollar could quickly recover on renewed risk aversion. Traders should also monitor whether higher oil prices keep inflation concerns elevated, which could limit how far the euro can extend its rebound.

On the upside, a sustained move in EUR/USD would likely need continued dollar softness, better risk appetite, and further signs that US growth is slowing faster than inflation is cooling. In that case, the pair could keep testing higher resistance levels as momentum improves.

EUR/USD Outlook

For now, the short-term tone is constructive for EUR/USD, but the broader picture remains data-dependent. Softer US growth, weaker monthly PCE, and easing geopolitical tension all support the euro, yet ongoing Fed caution and unresolved Middle East headlines argue for a cautious approach.