Fundamental Market Analysis for July 22, 2025 EURUSDThe euro is trading near 1.1700, having retreated from an intraday high of 1.1720 after the release of the final June U.S. CPI figures, which confirmed a slowdown in inflation to 2.7% y/y and 0.1% m/m while keeping the core reading steady at 3.1%. The brief rise in risk appetite quickly gave way to stronger demand for the dollar as the probability of the Fed’s first rate cut in September fell from 65% to 55%.
Additional pressure on the euro comes from the yield differential: 10-year U.S. Treasuries hover around 4.45%, while German Bunds yield only 2.30%. The gap of more than 215 bp encourages capital to flow from the eurozone into dollar assets, supporting USD demand.
Fundamentally, risks for the euro remain tilted to the downside: after June’s rate cut the ECB said further moves depend on price dynamics, and the eurozone composite PMI dropped to 50.1 – the brink of stagnation. Against the backdrop of weak continental activity and moderate yet persistent U.S. inflation, the pair may test support at 1.1615 in the coming sessions, especially if U.S. durable-goods orders exceed forecasts.
Trading recommendation: SELL 1.1700, SL 1.1720, TP 1.1615
