The euro fell to its lowest level against the dollar since early July
2025-07-30 20:43:32
On Wednesday (July 30), the euro fell below the $1.1550 mark against the US dollar, hitting a low in June 2025. July may become the first month in 2025 in which the euro/dollar currency pair falls.
The trade agreement signed between the United States and Europe last weekend is drawing harsh scrutiny from market participants. The newly reached trade agreement between the United States and the European Union is perceived by the market as unfavorable to the EU, with potential negative impacts on European exporters in particular. The agreement is a "political agreement" lacking legal force, and details such as steel, aluminum, and copper trade quotas and liquefied natural gas purchases remain unclear, increasing market uncertainty. Future negotiations may be accompanied by the threat of tariffs, weakening the euro's appeal.
The market's expectations for a rate cut by the European Central Bank have been postponed, with the probability of a rate cut falling to below 70% in December 2025 and 90% in March 2026. This suggests that expectations for monetary policy easing in the short term have weakened, limiting support for the euro.
CFTC data shows that speculators hold a large number of long euro positions, indicating excessive bullish positioning and increasing the risk of a correction. The demand for upside protection for the euro in the options market has decreased, reflecting a decline in investor confidence.
The Federal Reserve will announce its interest rate decision at 02:00 Beijing time on Thursday. Analysts predict that the federal funds rate is expected to remain unchanged between 4.25% and 4.50%.
Technical Analysis
The ascending channel that has been in place since mid-May was decisively broken by bears this week. The nature of the breakout (highlighted by the red arrow) was particularly aggressive, with the price dropping from the 1.1710 level to the low at point D without any meaningful intermediate bounce.
(Source of EUR/USD 4-hour chart: Yihuitong)
The decline resulted in a classic falling ABCD pattern, characterized by lower highs and lower lows.
On the 4-hour time frame, the Relative Strength Index (RSI) indicator has fallen into oversold territory.
It is worth noting that (as indicated by the arrow), there was a strong rebound from the 1.1455 support level. At that time, the bulls showed significant strength and broke through the R resistance line.
Given these factors, we can assume that after this week's sharp decline, EUR/USD may attempt a short-term rebound from the support area (highlighted in brown). If this scenario unfolds, potential resistance could appear around the 1.1630 level, as this area aligns with the following factors:
50% Fibonacci retracement level of the C→D decline;
→ A breakout of the lower boundary of the ascending channel indicates that the market balance is tilting in favor of the bears.
The trade agreement signed between the United States and Europe last weekend is drawing harsh scrutiny from market participants. The newly reached trade agreement between the United States and the European Union is perceived by the market as unfavorable to the EU, with potential negative impacts on European exporters in particular. The agreement is a "political agreement" lacking legal force, and details such as steel, aluminum, and copper trade quotas and liquefied natural gas purchases remain unclear, increasing market uncertainty. Future negotiations may be accompanied by the threat of tariffs, weakening the euro's appeal.
The market's expectations for a rate cut by the European Central Bank have been postponed, with the probability of a rate cut falling to below 70% in December 2025 and 90% in March 2026. This suggests that expectations for monetary policy easing in the short term have weakened, limiting support for the euro.
CFTC data shows that speculators hold a large number of long euro positions, indicating excessive bullish positioning and increasing the risk of a correction. The demand for upside protection for the euro in the options market has decreased, reflecting a decline in investor confidence.
The Federal Reserve will announce its interest rate decision at 02:00 Beijing time on Thursday. Analysts predict that the federal funds rate is expected to remain unchanged between 4.25% and 4.50%.
Technical Analysis
The ascending channel that has been in place since mid-May was decisively broken by bears this week. The nature of the breakout (highlighted by the red arrow) was particularly aggressive, with the price dropping from the 1.1710 level to the low at point D without any meaningful intermediate bounce.
(Source of EUR/USD 4-hour chart: Yihuitong)
The decline resulted in a classic falling ABCD pattern, characterized by lower highs and lower lows.
On the 4-hour time frame, the Relative Strength Index (RSI) indicator has fallen into oversold territory.
It is worth noting that (as indicated by the arrow), there was a strong rebound from the 1.1455 support level. At that time, the bulls showed significant strength and broke through the R resistance line.
Given these factors, we can assume that after this week's sharp decline, EUR/USD may attempt a short-term rebound from the support area (highlighted in brown). If this scenario unfolds, potential resistance could appear around the 1.1630 level, as this area aligns with the following factors:
50% Fibonacci retracement level of the C→D decline;
→ A breakout of the lower boundary of the ascending channel indicates that the market balance is tilting in favor of the bears.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
