EUR/USD Holds 1.1790 After 9-Day Rally as Fed and Fiscal Risks Weigh on Dollar

EUR/USD held steady around 1.1790 during Tuesday’s European session after a brief pullback from a 9 day rally that took the pair...

Written by: Arslan Butt • Tuesday, July 1, 2025 • 2 min read

• Last updated: Tuesday, July 1, 2025

Quick overview

EUR/USD remains stable around 1.1790 after a brief pullback from a rally above 1.1800, supported by US dollar weakness.
Concerns over a proposed $3.3 trillion US tax and spending plan are contributing to the dollar's decline amid trade tensions.
Speculation of rate cuts by the Federal Reserve is increasing, with markets pricing in two cuts before the year ends.
Technically, EUR/USD is consolidating gains and targeting a breakout above 1.1828, with bullish momentum indicated by the MACD.

EUR/USD held steady around 1.1790 during Tuesday’s European session after a brief pullback from a 9 day rally that took the pair above 1.1800—a level not seen since 2020. The pair is well supported mainly due to US dollar weakness as market focus shifts to fiscal concerns, trade friction and monetary policy uncertainty.

The greenback continues to lose traction after the proposed $3.3 trillion US tax and spending plan was announced, despite being framed as a reform measure it has increased fears over national debt expansion. A recent rare earths deal with China was positive but was quickly overshadowed by US-Japan trade tensions and investor caution.

Fed Policy in Focus as Rate Cut Bets Climb

Rate cut speculation is adding to dollar weakness. President Donald Trump’s latest criticism of Fed Chair Jerome Powell including calls for interest rates to be aligned with Japan’s 0.5% and Denmark’s 1.75% has increased policy uncertainty.

Markets are now pricing in 2 rate cuts before year end. According to CME’s FedWatch Tool, odds of a 25bps cut in July is 20% and a September cut is nearly fully priced in.

This dovish tilt is keeping EUR/USD above both its 50 period EMA and rising trendline support, with traders now looking ahead to Powell’s speech at the Sintra central banking forum for forward guidance.

Technical Outlook: Bulls Watch 1.1828 for Breakout

From a technical standpoint EUR/USD is consolidating gains but remains bullish. The pair has cleared 1.1768 and now eyes 1.1828 a key near term resistance.

EUR/USD Price Chart - Source: Tradingview — EUR/USD Price Chart – Source: Tradingview

Trade Setup:

Bullish Entry: Close above 1.1828
Stop-Loss: Below 1.1760
Target 1: 1.1859
Target 2: 1.1891

The MACD is still strong with the signal line trending up, bullish unless a sharp reversal develops.

Upcoming Events

The next move in EUR/USD could be driven by macro data and central bank signals. Watch out for:

Eurozone CPI
US JOLTS job openings
ISM Manufacturing PMI
Powell’s speech at SintraFor now, steady.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.