ING expects EUR/USD to remain supported around 1.1500 following the sharp Dollar selloff, although a sustained move above 1.1600 would require a further dovish repricing of US interest rates.

The Euro to US Dollar exchange rate (EUR/USD) gained just over 1% in July, recovering from a monthly low near 1.1354 and reaching a high around 1.1547.

EUR/USD pair remains 1.7% lower for 2026, having fallen from January’s peak at 1.2075 to a year-to-date low of 1.1325 in June.

The latest 48-hour chart above shows the pair rising from below 1.1440 to above 1.1530, leaving it close to the upper end of its recent range. The daily chart also shows EUR/USD moving back above its 20-day moving average, although it remains close to the declining 50-day average.

ING believes the sharp change in Dollar momentum leaves the Euro better supported in the near term.

The Greenback came under pressure after the Federal Reserve delivered a more dovish message than markets had expected. Investors were left questioning whether policymakers would follow through on their inflation-fighting rhetoric with actual rate increases.

The US Dollar’s decline accelerated after US core PCE inflation rose only 0.1% in June and second-quarter growth undershot expectations.

Suspected Japanese intervention against the Yen added to the pressure by triggering a sharp fall in USD/JPY and spilling over into broader Dollar sentiment.

Positioning may also keep the move going.

ING estimates that speculative long-Dollar exposure against other major currencies was at its most stretched since January 2025, while leveraged funds held their largest EUR/USD short positions since 2021.

According to the bank, “there may still be room for further USD long-squeezing”, making it too early to call a firm bottom in the Dollar selloff.

Analysts at ING note EUR/USD broke through 1.1500 “with little resistance” and expects the level to attract buyers for a while longer.

The bank sees near-term risks tilted towards further Euro gains, although it is cautious about chasing a sustained move above 1.1600.

Such a break would probably require another material repricing lower in US rates, together with an easing in Middle East tensions.

For now, ING expects buyers to continue emerging around 1.1500, with 1.1600 marking the more difficult test for the recovery.

Exchange Rates UK Research

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