EUR/USD Falls Below 1.1800 After Fed’s Hawkish Remarks Lift U.S. Yields
EUR/USD dropped decisively below the key 1.1800 support, hitting an intraday low near 1.1765 after a string of unexpectedly hawkish comments from Federal Reserve officials. The Fed rhetoric emphasized persistent core services inflation, a tight labor market and continued quantitative tightening, prompting a 12-basis-point jump in the 2‑year Treasury yield and a sharp rise in dollar demand. Trading volumes rose ~40% above the 30‑day average during the European–New York overlap. Technical indicators deteriorated: the 50‑day SMA crossed below the 200‑day SMA (a “death cross”) and RSI entered oversold territory below 30, suggesting potential short-term bounces but overall bearish momentum. Analysts note widening Fed–ECB policy divergence — the ECB is easing amid slowing Eurozone growth — which supports sustained dollar strength. Market implications include downward pressure on dollar‑priced commodities, higher debt servicing costs for dollar‑denominated liabilities, and mixed effects for Eurozone exporters. Traders should monitor upcoming U.S. CPI and payrolls releases and ECB communications for confirmation or reversal. Key data points: EUR/USD ~1.1765 session low, 1.1800 support breached, 2‑year U.S. yield +12 bps, volume ~+40% vs 30‑day avg.
Bearish
The article describes a clear driver for dollar strength: hawkish Fed commentary that raised short-term rate expectations and pushed 2‑year yields higher (+12 bps). That fundamental shift, combined with technical deterioration (death cross, RSI <30) and a confirmed break of the psychological 1.1800 support with volume ~+40%, signals momentum toward lower EUR/USD. Historical precedent shows that Fed–ECB policy divergence typically fuels sustained dollar rallies. Short-term, expect continued downside pressure with possible brief corrective bounces from oversold indicators or headline-driven volatility (CPI, payrolls, ECB comments). Medium to long-term, unless ECB tightens or the Fed pivots, the policy gap should keep a bearish bias on EUR/USD and raise risk of testing prior 2025 lows. For crypto markets, a stronger dollar can weigh on dollar‑priced assets and reduce liquidity appetite, increasing downside pressure on risk assets during risk-off flows.