EUR/USD Price at 1.1530 Steadies on Dovish Fed Signals and Trade Truce

EUR/USD Price Holds Near 1.1530 as US Dollar Pulls Back

EUR/USD traded around 1.1531 in early European hours after slipping from 1.1600 last week. A modest retreat in U.S. Dollar demand followed dovish signals from San Francisco Fed President Mary Daly, who argued that weakening jobs data and muted tariff-driven inflation point to an interest rate cut as soon as September. With the CME FedWatch Tool indicating over a 90 percent probability of a 25 basis-point Fed reduction, USD selling has lent support to the euro even as broader market volatility remains subdued.

Eurozone Services PMI Confirms Tepid Expansion at 51.0

Final HCOB figures showed the Eurozone Services PMI steady at 51.0 in July, up from June’s 50.5 but still marginally above the no-change 50 threshold. The Composite PMI arrived at 50.9, slightly under its flash 51.0 reading. The data underline that although activity continues to expand, the pace is the weakest seen over the past year, held back by stagnant new orders and cautious business sentiment. Producer Price Index inflation of 0.8 percent month-on-month and 0.6 percent year-on-year further attest to subdued domestic price pressures.

EU Suspends Retaliatory Tariffs, Easing Trade Uncertainty

European Commission President Ursula von der Leyen announced a six-month suspension of counter-tariffs that had been scheduled to hit U.S. goods on August 7. The moratorium buys time for intensified trade negotiations and alleviates fears of a tit-for-tat escalation with the world’s largest economy. By delaying 15 to 39 percent duties on steel, aluminum and other products, Brussels has removed a key source of uncertainty that had weighed on the euro through July.

Technical Landscape: EUR/USD Back Above 1.1500 Support

From a daily chart perspective, EUR/USD remains capped by the 20 day simple moving average near 1.1630, but continues to find a foothold above the 100 day SMA at 1.1500. Oscillators are tilting lower after failing to clear neutral mid-points, reflecting the recent shift in momentum toward bears. On the four-hour timeframe, price trades below both the 100 and 200 SMAs, yet the 20 SMA at 1.1505 is poised to absorb any deeper pullbacks. With the RSI hovering near 48 and the MACD histogram close to zero, the pair appears locked in a consolidation phase rather than a decisive trend change.

Diverging Monetary Policies Underpin EUR/USD Dynamics

While U.S. rate-cut bets gather pace, the European Central Bank has paused easing after achieving its 2 percent inflation target, signaling fewer cuts ahead for the euro area. This policy divergence—more than three percentage points of cumulative Fed easing priced in versus a steady ECB stance—provides a structural rationale for euro strength. Traders now weigh slower Eurozone growth against the likelihood of cheaper U.S. borrowing costs, creating a tug-of-war that keeps EUR/USD oscillating within its recent 1.1400–1.1650 corridor.

ISM and S&P Global Services PMI to Influence Near-Term Trajectory

Attention now shifts to U.S. service-sector releases, with S&P Global’s July Services and Composite PMIs due at 13:45 GMT and the official ISM Services PMI at 15:00 GMT. Market consensus forecasts readings near 52.0 and 50.8 respectively—levels that would reinforce the view of a cooling economy. Should both surveys undershoot expectations, U.S. Treasury yields could soften further, amplifying EUR/USD’s advance toward 1.1600. Conversely, firmer-than-expected data may reanimate USD bulls, testing euro support at 1.1500 once more.

Correlation with Fed Funds Futures Reflects Dollar-EUR Interplay

Over the past week, EUR/USD’s five-day correlation with the implied Fed funds futures curve exceeded 0.9, underscoring how closely the cross tracks shifts in rate-cut expectations. As markets ramp up bets for September, any deviation in futures pricing—driven by surprising labor or inflation prints—can trigger swift adjustments in EUR/USD. This dynamic has rendered the currency pair highly sensitive to U.S. economic surprises, even as Eurozone data remains range-bound.

Positioning and Tactical Outlook: Hold Core, Await Confirmation

Given the mixed technical signals, looming U.S. service-sector releases, and sustained policy divergence, maintaining a neutral EUR/USD position is prudent. Buyers may look to accumulate near 1.1500–1.1520 with stops below last week’s low at 1.1450, targeting a return to 1.1600 if U.S. PMIs disappoint. Alternatively, those seeking to fade the rally could consider shorts above 1.1600, with protective stops beyond 1.1650, in anticipation of firm U.S. data and renewed USD strength.

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