just now
- Euro and pound rally fades as U.S. dollar strength returns with rising yields.
- ECB and BOE shift dovish, reducing bullish momentum in EUR/USD and GBP/USD.
- DXY recovery resumes, capping gains in major FX pairs amid macro caution.
After a soft start to the week, the U.S. dollar is regaining its footing, pushing major FX pairs like EUR/USD and GBP/USD into corrective territory. Both the euro and the pound initially found relief on local headlines — including delayed U.S. tariffs and softer inflation prints — but the bounce was short-lived.
Now, as Treasury yields climb and the DXY resumes its upward path, the macro landscape is shifting again — and it’s favoring the greenback but for how long?
EUR/USD: Euro Faces Resistance as Dollar Strength Returns
The euro began the week on firmer ground following Trump’s decision to delay the implementation of tariffs on EU imports. That news briefly lifted EUR/USD but was not able to create new highs vs the last week’s high. Trump imposed a 50% tariffs on European Union imports, initially scheduled for June 1.
The move lacked conviction. As the week progressed, U.S. yields began to rise again, and the dollar regained its strength — pushing EUR/USD off its highs. Add in persistent softness in eurozone confidence data and expectations that the ECB will cut rates soon, and it’s clear why bullish momentum quickly evaporated.
The DXY’s recovery is once again capping euro strength, with further upside likely limited unless incoming data surprises to the upside.
Previously, I outlined in my last weekly outlook,
,** the scenarios that the Dollar could face this week. It seems that the bullish scenario is playing out in favor of Dollar strength.Technical Levels to Watch Out
- 1.11312 - 1.10654
Once price reaches these levels, observe if price is willing bounce off or go for further downside.
GBP/USD: Cable Loses Steam After UK CPI Dip and USD Recovery
Sterling stumbled last week even after a strong run of UK data. Headline CPI jumped to 3.5%, above both the forecast and the prior figure, signaling inflation remains sticky. Retail sales posted an impressive 1.2% gain, and services PMI also edged higher — suggesting underlying economic resilience.
Yet the pound failed to hold its ground. Traders appear skeptical that the Bank of England will respond forcefully, especially as other central banks like the ECB are already leaning dovish. The broader dollar rebound and rising U.S. yields added pressure, dragging GBP/USD back below the 1.28 handle.
Overall, bullish structure for pound is still intact. Potential for upside move is still on the table.
Technical Levels to Watch Out
Immediate Levels for Sweeps
- 1.33880 - 1.33342 - As long as these levels only get swept and price wont break below, bullish scenario is still in play.
- 1.32485 - 1.31394 - These levels could pose bearish threats on pound, adding to the pressure will be Dollar reasserting its strength.
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