EUR/USD Price Forecast: Wage Growth Jumps 3.95% as ECB Faces Test
The European Central Bank (ECB) reported that Euro area negotiated wages rose 3.95% year-on-year in Q2 2025...
Quick overview
- Euro area negotiated wages rose 3.95% year-on-year in Q2 2025, up from a revised 2.46% in Q1.
- The ECB's wage indicator covers nine countries and tracks negotiated monthly earnings, highlighting labor cost dynamics.
- Market reaction to the wage growth data was muted, with expectations of moderation into 2026.
- Technically, EUR/USD is under pressure, with sellers controlling the market unless buyers break above key resistance levels.
The European Central Bank (ECB) reported that Euro area negotiated wages rose 3.95% year-on-year in Q2 2025, up from a revised 2.46% in Q1. The numbers show stronger pay agreements across the bloc as inflation pressures ease from last year’s highs. The euro didn’t budge, EUR/USD trading flat around $1.1596 at the time of release.
The ECB’s indicator, which is watched for wage-inflation dynamics, covers nine countries including Germany, France, Italy, Spain, the Netherlands, Belgium, Finland, Austria and Portugal. It tracks negotiated monthly earnings rather than broader wage data, so it’s a narrower but important measure of labor costs.
Why Wage Data Matters for the ECB
Higher wage growth means second-round inflation effects, as stronger pay packets boost household spending and prolong price pressures. For the ECB which has been fighting to keep inflation near 2% target, an uptick to nearly 4% wage growth complicates the policy debate.
Key points:
- Euro area negotiated wages 3.95% YoY in Q2
- Q1 was revised higher to 2.46% YoY
- Data covers nine Eurozone countries
- EUR/USD flat around $1.1600
So far, policymakers aren’t panicking. Market reaction was muted because investors see wage growth moderating into 2026 as new contracts roll over and inflation expectations settle.
EUR/USD Price Forecast
Technically, the euro is under pressure. On the two-hour chart, EUR/USD is below a descending trendline, with sellers capping rebounds. The pair tested $1.1581, a prior demand zone, before stabilizing – so buyers are still defending short-term support.
Momentum indicators are cautious. The RSI is 36, oversold, so we might see a bounce. The MACD is below its signal line, bearish. Unless buyers take out the 50-period EMA at $1.1645, sellers are in control.From a pattern perspective, EUR/USD is making lower highs under the trendline. A rejection at $1.1640 could take the pair down to $1.1517 and possibly $1.1460. A break above the trendline with a bullish engulfing candle would be the first higher high in weeks and would be a reversal signal.
Trade: Sell into strength. Look for shorts at $1.1640 with stops at $1.1670 and targets at $1.1517 and $1.1460. More cautious traders may wait for a break below $1.1580 to get on the next move down.
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