EUR/USD is trading around 1.1475, hitting its lowest point since June 23 after falling for the fifth straight day. The Euro is under pressure from a strong US Dollar, fueled by positive US economic data. The ADP jobs report shows an increase of 104,000 jobs in July, reversing last month’s decline. Concerns about the US-EU trade agreement, seen as more beneficial for the US, continue to impact the Euro. Traders are also focused on the Federal Reserve’s policy decision, which could further push the Euro down against the Dollar. The EUR/USD pair is near its weakest level since June, hovering around 1.1475. This week’s decline of over 2.0% highlights the growing pressure on the Euro, influenced by the strength of the US Dollar and expectations of stable interest rates from the Federal Reserve. The US Dollar’s strong performance is based on economic strength, with a 3.0% annual GDP growth in Q2, beating the 2.4% forecast. Inflation measures, including the core PCE Price Index, increased by 2.5% quarter-over-quarter, although some data suggests a move towards lower inflation. Eurostat reported a 0.1% growth in the Eurozone economy for Q2, which was better than expected. While there was slight improvement in the Economic Sentiment Indicator across some Eurozone countries, it did little to help the Euro. Attention is now on the Fed’s upcoming policy announcement and its potential impacts on interest rates. With the Dollar’s momentum, we expect EUR/USD to drift lower in the coming weeks. The clear contrast between strong US growth and weak Eurozone performance supports this outlook. The Federal Reserve’s announcement today will be crucial for the next move. We are considering buying put options on EUR/USD to profit from further declines. This strategy offers a way to manage risks if the price drops below recent lows near 1.1475, especially before the potentially volatile Fed event. Recent data, such as last week’s German IFO Business Climate index falling to 87.3, reflects growing concern in the Eurozone’s largest economy. Next, all eyes will be on the US Non-Farm Payrolls report on August 8, 2025, which we expect to confirm labor market strength shown in the ADP data. A strong NFP report could push the pair towards our next target. This situation reminds us of market conditions in 2022, when a strong Fed and a cautious ECB drove EUR/USD below parity for the first time in 20 years. While we’re not predicting a drop to 1.0000 yet, it’s a reminder of how far the pair could fall under current conditions. The market will be alert to any “higher for longer” statements from the Fed today. A significant drop below the 1.1450 support level, the low from early June 2025, would confirm our bearish outlook. This could lead to testing the key psychological level of 1.1300 in August. We will consider increasing our bearish positions if we see a daily close below 1.1450.

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