- EUR/USD traded near 1.1440 after recovering from recent lows, supported by expectations that the European Central Bank could raise interest rates again in September.
- The euro’s advance remains limited as escalating US-Iran tensions and oil prices above $90 increase safe-haven demand for the US dollar.
- EUR/USD must clear the 1.1470–1.1500 resistance zone to strengthen its recovery, while 1.1400 remains the first major support level.
The EUR/USD exchange rate held near 1.1440 on Monday as traders weighed the prospect of another European Central Bank interest rate increase against renewed demand for the US dollar amid escalating tensions between Washington and Tehran.
The currency pair was trading around 1.1437 at the time of writing, having pulled back from last week’s high near 1.1480. The euro remains supported by expectations that the ECB will retain a hawkish bias at this week’s policy meeting, even though policymakers are widely expected to leave borrowing costs unchanged.
However, the dollar has regained some ground as the US-Iran conflict intensifies and disruption to oil shipments through the Strait of Hormuz pushes energy prices higher. Brent crude rose above $90 a barrel, reviving inflation concerns and strengthening the case for the Federal Reserve to maintain higher interest rates.
Why Is EUR/USD Rising Today?
The euro has found modest support from changing expectations for ECB monetary policy.
The ECB is expected to keep its deposit rate unchanged at 2.25% when officials meet on Thursday. Nevertheless, a Reuters poll found that most economists expect another rate increase later this year, with September emerging as the most likely timing.
That outlook has become more credible following the renewed increase in energy prices. Eurozone inflation eased to 2.8% in June but remains above the ECB’s 2% target, while rising oil and gas costs threaten to create another wave of price pressure.
Consequently, the euro has retained support even as the ECB prepares to pause after its previous rate increase. Traders will pay close attention to President Christine Lagarde’s comments for any indication that September remains a live option.
Will the ECB Raise Interest Rates in September?
A September rate increase is increasingly becoming the central question for the EUR/USD forecast.
Around 70% of economists surveyed by Reuters expect the ECB to raise rates once more before the end of 2026. However, policymakers must balance renewed inflation risks against a weak eurozone economy, which expanded by only 0.2% during the latest quarter.
The ECB’s challenge is that higher energy prices can simultaneously lift inflation and weaken economic activity. Businesses face higher operating costs, while households have less disposable income available for other goods and services.
A clearly hawkish message from Lagarde could help EUR/USD challenge 1.1500. Conversely, a more cautious tone that emphasises weak growth could encourage traders to reduce expectations for a September move and weigh on the euro.
How Are US-Iran Tensions Affecting EUR/USD?
Escalating hostilities between the United States and Iran are preventing a stronger euro recovery.
The United States carried out a ninth consecutive night of strikes, while Iran warned that the Strait of Hormuz would remain unsafe for oil, gas and petrochemical shipments. Ship traffic through the strategically important waterway has declined sharply, contributing to Brent crude’s move above $90 and WTI’s rise beyond $84.
The development creates two headwinds for EUR/USD.
- First, geopolitical uncertainty increases demand for the US dollar as investors move toward highly liquid safe-haven assets.
- Second, Europe is particularly exposed to imported energy costs, meaning a sustained oil shock could weaken the eurozone growth outlook even while forcing the ECB to keep monetary policy restrictive.
The dollar has therefore remained resilient despite recent evidence that US inflation had begun to moderate. Markets are also pricing an increased possibility of another Federal Reserve rate rise before the end of the year.
EUR/USD Technical Analysis: Can the Euro Break Above 1.1500?
The one-hour chart shows EUR/USD consolidating near 1.1437 after its retreat from the 1.1480 area. Price is hovering around the middle Bollinger Band near 1.1436, indicating that neither buyers nor sellers currently have firm control.
The Moving Average Convergence Divergence indicator is beginning to stabilise after turning negative during the latest pullback. However, momentum remains limited, suggesting that the pair may continue trading sideways unless a fresh fundamental catalyst emerges.
Immediate resistance is located between 1.1445 and 1.1470, where the upper Bollinger Band and recent intraday highs are concentrated. A sustained move above 1.1470 would expose the psychologically important 1.1500 level.
A close above 1.1500 would improve the short-term structure and could open a move toward 1.1580 and 1.1620.
On the downside, 1.1425 provides initial support near the lower Bollinger Band. The more important level is 1.1400, which has repeatedly attracted buyers. A decisive break beneath 1.1400 would weaken the recovery and bring 1.1375 back into focus, followed by 1.1320.
EUR/USD Outlook Ahead of the ECB Rate Decision
The immediate EUR/USD outlook hinges on whether the ECB validates market expectations for another rate increase in September.
A hawkish policy statement could help the euro test 1.1470 and 1.1500, particularly if Lagarde signals that higher energy prices pose a material threat to inflation. However, the dollar is likely to remain supported while the US-Iran conflict disrupts energy markets and drives investors toward safety.
For now, EUR/USD appears caught between a more hawkish ECB outlook and a stronger geopolitical bid for the dollar. That leaves the pair vulnerable to further consolidation until Thursday’s ECB decision provides a clearer policy signal.
EUR/USD is finding support as investors expect the European Central Bank to retain a hawkish stance and potentially raise interest rates again in September. However, gains remain limited by safe-haven demand for the US dollar.
A hawkish ECB decision would likely support the euro by strengthening expectations for higher interest rates. A cautious statement focused on weak economic growth could weigh on EUR/USD and bring the 1.1400 support level back into focus.
