Where we are: EUR/USD is currently trading at 1.1769, up +0.06% on the day and near the upper end of today’s 1.1749-1.1782 range. The pair is holding its gains from late last week, consolidating above the 1.1750 level and slightly above the prior NY close.
What’s driving it: The Euro is finding some support as markets price in at least two ECB rate hikes for 2026, with money markets indicating over a 78% probability of the first hike in June. However, the ECB’s latest decision to cut rates by 25bp in April and maintain a mild easing bias continues to hang over the currency. The Bund 10Y yield is up slightly at 3.040%, but the substantial US-DE 10Y yield spread of +135bp continues to favour the Dollar, limiting Euro upside. DXY remains steady at 97.87.
- ECB President Lagarde on Friday reiterated the central bank’s readiness to act swiftly if necessary, though this hasn’t prevented markets from pricing in further easing down the line.
- Reuters reported that ECB’s Kocher sees a rate move if the inflation outlook does not improve.
- Speculator positioning in EUR is modestly long at +32,202 contracts, near the 10th percentile of its 52-week range, suggesting room for further long build if momentum picks up, but also potential for downside if the narrative shifts.
NY session focus: With no major Eurozone data releases scheduled for today, the focus will be on US yields and risk sentiment as the New York session gets underway. Watch for any significant moves in the US 10Y yield which currently sits at 4.393%. Key levels to watch on EUR/USD are 1.1785 as initial resistance and 1.1740 as initial support. The trade that’s working is a cautious long in EUR/USD above 1.1750, but it’s at risk if the Dollar bid returns and risk aversion rises. The pain trade for EUR/USD would be a break below 1.1700, triggering a quick unwind of existing long positions.