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05.06.202600:32 Forex Analysis & Reviews: EUR/USD: Trading in a Cage Like a Tiger

Rilevanza fino a 08:00 2026-06-09 UTC--4

The markets are so fatigued by geopolitics that they reluctantly react to bad news while enthusiastically buying good news. When Israel and Hezbollah announced a ceasefire, EUR/USD soared on expectations of de-escalation in the Middle East conflict. However, Iran's earlier statement about the lack of progress in negotiations with the US did not fuel a rally in the USD index. The euro desperately needs some positive news, but that is still not in sight.

Reuters' Predictions for EUR/USD

Exchange Rates 05.06.2026 analysis

According to the consensus forecast from Reuters experts, EUR/USD is expected to rise to 1.18 in one month, to 1.19 in three months, and to 1.20 in a year. This assessment is based on the belief that a quick resolution to the conflict in the Middle East would strip the US dollar of its safe-haven demand. At the same time, Donald Trump would be able to shift his focus from external problems to internal ones. Ultimately, the Federal Reserve will do what the US president wants—lower the federal funds rate.

In this regard, the upcoming FOMC meeting under Kevin Warsh's leadership in June may prove significant. Morgan Stanley believes that a shift in the Fed's worldview will lay the foundation for a prolonged downward trend in the USD index.

However, the Fed is not a one-actor theater. The uncertainty surrounding the Middle Eastern conflict, stabilization of the US labor market, and accelerating inflation dictate the need to maintain or even raise the federal funds rate. Conversely, the European Central Bank is unlikely to tighten monetary policy as much as futures markets expect.

OECD Economic Forecasts

Exchange Rates 05.06.2026 analysis

Simultaneously, the euro will struggle to recover from the narrowing divergence in economic growth. The bullish forecasts for EUR/USD in early 2026 took this factor into account. However, the OECD predicts that US GDP will grow by 2% in 2026 and by 1.8% in 2027. In comparison, the corresponding figures for the European economy are 0.8% and 1.2%. In other words, the gap will narrow only next year. Only then can we talk about a rally of the main currency pair to 1.25 and above. For now, it appears premature.

Exchange Rates 05.06.2026 analysis

The EUR/USD pair clearly has a ceiling. The optimism is being created by Trump's comments about a deal with Iran, alongside Warsh, who is ready to make the US president's dream of lowering the federal funds rate a reality. However, for this to happen, the new Fed chairman will need to try very hard. In such conditions, the main currency pair is doomed to medium-term consolidation.

Technically, the daily chart for EUR/USD shows a consolidation in the fair value range of 1.1585–1.1730. A breakout above the resistance at 1.1645 will increase the risk of a rally towards its upper boundary and provide a reason to buy euros against the US dollar. Conversely, a bounce from fair value will serve as evidence of the bears' strength and provide grounds for selling the major currency pair.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Marek Petkovich,
Analytical expert of InstaSpot
© 2007-2026
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