EUR/USD forecast: Currency Pair of the Week | June 22, 2026

The euro started the week on a softer footing against the dollar, surrendering part of Friday’s rebound as investors continued to digest last week’s shift in Federal Reserve messaging. Although the EUR/USD managed to stabilise towards the end of the previous week, the overall backdrop remains supportive for the dollar after policymakers at the Fed signalled a more hawkish policy outlook than markets had anticipated, with markets now pricing some 40-45 basis points of hikes by the end of the year. The late-week recovery in the euro owed more to position adjustment than any meaningful change in fundamentals, with reduced trading activity helping to trigger profit-taking in long-dollar positions. While downside risks remain, the EUR/USD forecast is far from bearish. The pair still appears relatively well placed to recover once the current bout of dollar strength begins to fade.

 

EUR/USD forecast: Economic data and Fed speak

 

This week is likely to be dominated by the debate over whether the Federal Reserve’s hawkish stance can continue to underpin the dollar or whether softer oil prices and easing geopolitical concerns will begin to erode support for the US currency.

 

With the Fed offering limited forward guidance, markets are increasingly reliant on speeches from policymakers and incoming economic data to shape expectations. As a result, volatility across rates and currency markets could remain elevated as investors reassess the outlook after each significant release.

 

Two data events stand out in particular: Global PMIs and US Core PCE price index.

 

The Purchasing Managers’ Index (PMI) readings released on Tuesday will offer an important snapshot of economic momentum across major economies. European assets have recently benefited from lower energy costs and growing confidence that the European Central Bank will not hike again after that insurance rate increase earlier this month.

 

Investors will be keen to see whether improving market sentiment is reflected in business activity surveys and whether signs of resilience emerge across the eurozone economy. If so, this should keep risk assets supported, providing indirect support for the EUR/USD pair.

 

The other key data is Core PCE inflation data on Thursday. As the Fed’s preferred measure of underlying inflation, the data will carry particular significance following last week’s policy meeting.

 

Markets are currently attempting to gauge whether recent hawkish signals from policymakers can be justified by incoming economic data. A stronger-than-expected reading would reinforce expectations that tightening remains firmly on the table.

 

But can the dollar recovery hold?

 

Despite the EUR/USD’s current weakness, there are reasons to question whether this marks the start of a more durable bearish trend.

 

One of the key pillars weighing on the euro and supporting the greenback in recent months has been heightened geopolitical uncertainty and oil prices. With tensions easing following diplomatic developments in the Middle East, that particular source of demand has begun to fade for the dollar.

 

Recent falls in energy markets might have also been expected to support the euro, given the region’s sensitivity to imported energy costs. Yet the single currency has struggled to translate that advantage into gains against the dollar. But we have seen some gains for a few euro crosses lates, like the EUR/CHF, to suggest there is some underlying support for the single currency.

 

It is also worth noting that markets may be pricing in a relatively aggressive path for US interest rates. Investors have become increasingly comfortable with the prospect of one or two rate hikes before year-end, particularly if US growth and inflation indicators continue to surprise on the upside.

 

Should upcoming data demonstrate continued economic resilience, there remains scope for markets to further adjust expectations in a more hawkish direction, providing another potential lift for the greenback. But the burden of proof now falls on the dollar bulls. Should incoming data paint a less rosy picture of the US economy, then the greenback could fall in favour of other more stable currencies like the euro.  

 

Technical EUR/USD forecast and analysis

 

From a technical analysis perspective, the recent price action continues to favour sellers in the short run. A sequence of lower highs points to persistent downside pressure as the new week begins.

 

 

Initial resistance for the EUR/USD is clustered around the 1.1480-1.1500 region. A sustained move above this zone could shift attention towards the 1.1580-1.1600 area, where another significant technical hurdle awaits.

 

On the downside, the area surrounding 1.1400 remains crucial. This zone incorporates both the August 2015 low and the March 2026 trough. A convincing break below these levels would represent a notable deterioration in the EUR/USD forecast and could open the door to a deeper decline towards 1.1300.

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R