EUR/USD – two hikes, two different reasons

EUR/USD sits at 1.1594, near the lower end of its 2026 range.

Eurozone composite PMI fell to 47.5, the worst reading since late 2023. The economy is contracting. At the same time, Iran-war energy costs are pushing inflation back toward 4%. Despite weak data, markets are pricing a European Central Bank hike on 11 June with high conviction.

Meanwhile, US manufacturing PMI hit a four-year high. The US is tightening into strength. Europe is tightening into weakness. Historically, the dollar wins that setup.

A hike alone may not be enough if growth keeps deteriorating. The pair needs both a hike and a clear signal from Lagarde that more are coming.

Key levels:

• Resistance: 1.1645, then 1.1680 and 1.1733
• Support: 1.1500, then 1.1435 (March 15 low)

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