EUR/USD Slides as Dollar Flexes Its Muscle

1.1617. That's where the Euro just landed, crashing through the 200-day moving average and hitting five-week lows. A 1% weekly decline sent the pair tumbling, and the selling is not finished.

🔹 The Breakdown Is Real
EUR/USD smashed through the 200-day and 52-week moving averages on Friday . The 1.1703 floor that held for weeks gave way. Then 1.1665 crumbled. Now the pair trades at 1.1617, and the next targets sit at 1.1596 and 1.1587. Below those, the 1.1578/98 zone represents the critical support where the January close low and the 61.8% Fibonacci retracement converge .

Societe Generale analysts confirmed the break below key averages, citing wider UST/Bund spreads and rising energy prices as the primary wrecking balls . Support now sits at 1.1560. Resistance at 1.1720 is the ceiling.

🔹 Why The Dollar Is Crushing Everything
The US Dollar Index printed 98.51, holding near five-week highs and posting its best weekly gain in two months . This is not random strength. US retail sales crushed expectations. CPI hit 3.8%. PPI exploded to 6.0%. Rate cut expectations for 2026 are completely erased.

ING now forecasts the first Fed cut not until December 2026, with a second potentially in March 2027 . Three months ago those cuts were supposed to start in September. The repricing is violent.

Kevin Warsh takes the Fed Chair seat this week. His first FOMC lands in June. Markets are on edge about whether he leans hawkish or aligns with Trump's rate-cut demands.

🔹 The ECB's Rate Hike Gamble
The ECB is expected to hike rates in June . BNP Paribas ranks the ECB as the most hawkish central bank among major economies, with the Bank of Japan and Bank of England close behind. But the market is not rewarding the Euro for this hawkishness. Why? Because the US economy is growing faster, yields are higher, and the dollar is the global safe haven when geopolitics flare up.

The US-Iran conflict keeps oil above $100 per barrel. The Strait of Hormuz remains disrupted. Europe absorbs the energy shock more painfully than the US, which is a net energy exporter . The Eurozone faces stagflation, slowing growth plus rising inflation. The US faces strong growth plus rising inflation. One is clearly worse for currencies.

🔹 The Technical Path Forward
Support levels are stacked but fragile. 1.1587 comes first. Then 1.1578, the January close low. A breakdown below that opens the trapdoor toward 1.1483 and potentially 1.1355 .

Resistance sits at 1.1676 and 1.1720. A bounce that reclaims 1.1720 signals the correction might be over. Anything below that is just a dead cat bounce.
Bottom Line
EUR/USD crashed through the 200-day MA and hit 1.1617. The dollar strengthened on hot US data and rising rate hike expectations. The ECB is hiking in June, but the market does not care because the Fed is on hold indefinitely. Geopolitical risk from the Iran conflict keeps the safe-haven dollar bid. Support at 1.1587 is the line in the sand. Below that, 1.1483 enters the conversation.

Friends, does the ECB's June rate hike finally give the Euro a bid, or does dollar strength dominate for weeks to come?

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