EUR/USD Price Slips 0.9% as Wedge Breakout Unfolds: Watch These Key Levels

EUR/USD drifted down to around $1.1376 during Tuesday’s early European session, as traders booked profits following recent highs. The pair’s modest decline reflects a wait-and-see approach ahead of the Eurozone’s preliminary Consumer Price Index (CPI) release and the European Central Bank’s (ECB) decision. Expectations are that May’s headline inflation will cool to the ECB’s 2.0% target, down from April’s 2.2%, with core CPI dropping from 2.7% to 2.5%. These signs of easing price pressures could provide the ECB cover for its anticipated eighth straight rate cut on Thursday.

Still, ECB President Christine Lagarde may adopt a cautious tone, signaling a potential pause in rate cuts come July. This uncertainty keeps traders on edge, especially after the euro’s recent strength.

Key Highlights:

• Eurozone May CPI: 2.0% headline, 2.5% core expected

• ECB likely to cut rates but may pause afterward

• Traders cautious amid euro’s post-rally profit booking

US Dollar Weakness Sets the Stage

Across the Atlantic, the US Dollar struggles amid soft data and policy headwinds. The Dollar Index (DXY) slumped to a six-week low near 98.60, as May’s US ISM Manufacturing PMI slipped to 48.5—the lowest in six months. Despite small gains in new orders and employment, the report’s drop in prices paid and lingering delivery issues hint at trade-driven supply disruptions.

Compounding these concerns is President Trump’s unpredictable trade approach, alongside fiscal uncertainty, weighing on the Greenback. Traders are also watching US Factory Orders and the JOLTS Job Openings report, with job openings forecast flat at 7.1 million. Any downside surprise could fuel Fed rate cut expectations, further pressuring the dollar.

EUR/USD Technical Breakdown Signals Bearish Setup

Technically, EUR/USD broke below its rising wedge pattern on the 2-hour chart, testing $1.1376 (50-period EMA). This breakdown followed resistance at $1.1468 and formed a strong bearish engulfing candle, reinforced by a preceding spinning top—signals of growing bearish momentum.

MACD indicators also point to bearish pressure, with a negative crossover and expanding red histogram.

Key Levels:

• Support: $1.1376 (EMA), $1.1312 (horizontal)

• Resistance: $1.1418 (former support), $1.1468

Trade Idea:

• Entry: Short below $1.1376

• Target: $1.1312 or $1.1267 (aggressive)

• Stop-loss: Above $1.1418

Stay vigilant for bullish reversals like hammers or morning stars near support—otherwise, expect further downside if $1.1376 breaks decisively.