Where we are: EUR/USD is testing the critical 1.1600 handle in early London trade, marking its highest level since early June as it builds on yesterday’s firm close. The pair carved out a solid overnight range of 1.1540 to 1.1605, staging a clean breakout above the 50-day moving average which had capped upside all week. Spot is now sitting roughly 60 pips above the previous New York close, displaying resilient intraday momentum as European cash desks report steady corporate buying. If we hold this 1.1600 level through the New York open, the technical picture opens up toward the 1.1680 resistance zone.
What’s driving it: Eurozone macroeconomic resilience is underpinning the single currency’s recovery, highlighted by the ECB’s assessment that the regional economy is pulling through OK amid a stabilizing geopolitical backdrop. This domestic optimism is reinforced by ECB Chief Economist Philip Lane’s latest presentation on the euro area economic outlook, which emphasizes that while wage trackers are softening, services HICP near 3% prevents any rushed follow-up to April’s 25bp cut to 2.50%. These sticky domestic services pressures keep Eurozone yields supported, even as global risk sentiment improves on news of a major Middle East ceasefire agreement. Furthermore, European political tailwinds have emerged after EU lawmakers approved a long-delayed trade deal with Washington, removing a significant tariff overhang that had weighed on the export-heavy single currency.
- The ECB’s preservation of its meeting-by-meeting language and a services HICP sticky at 3% keeps the deposit rate anchored at 2.50%, making back-to-back cuts highly unlikely in the near term.
- EU lawmakers’ formal approval of the US trade deal removes a key structural drag, eliminating a looming tariff threat and boosting business sentiment across the bloc’s industrial core.
- CFTC positioning data reveals a severe washout, with net non-commercial longs collapsing by 34,934 contracts to +13,932—plummeting to the 6th percentile of its 52-week range and exposing heavily short-skewed fast money to a severe squeeze.
NY session focus: The immediate focus turns to the US macro data slate printing at 08:30 ET, where any sign of cooling across the Atlantic will amplify the Euro’s upward trajectory against a softening dollar. We are watching the 1.1620 resistance level as the key upside trigger, while 1.1550 should act as firm intraday support on any pullback. The trade that is working is long EUR/USD spot, targeting a move toward 1.1680, whereas chasing USD strength is highly at risk given the dramatic clearing of stale Euro longs. The pain trade for the session is a continued squeeze higher that forces macro funds to rebuild their recently liquidated Euro exposures above 1.1650.