EUR/USD Holds Firm as ECB Signals Further Rate Hikes Ahead

The EUR/USD pair has been trading in a tight range, holding its bullish structure despite rejecting attempts to push above the late May highs at 1.1685 and the 78.2% Fibonacci retracement of the May-June selloff at 1.1692.

This rejection point is significant, as it marks the second time the pair has failed to break through this level. The three-month high near 1.1697 printed on August 21 remains unchallenged, and the daily Relative Strength Index sits above 65, consistent with constructive momentum rather than a topping pattern.

The context for the current level is a two-month recovery, with EUR/USD bottoming at 1.1355 on June 24 and climbing 2.72% since. However, the wider frame shows that the pair fell to 1.14 after reaching 1.20 in early 2026, due to a combination of factors including the Strait of Hormuz conflict and central bank actions.

The ECB accounts published this morning provided further clarity on their rate-hike plans, with policymakers already penciling in a further increase potentially as soon as September. The language is direct: another hike would likely be necessary unless the inflation outlook improved significantly.