EURUSD is in turmoil as the market bets on the winner of the big geopolitical game

The EURUSD rate remains dependent on geopolitics and statements from the White House. After rising, the quotes are forming a correction and testing the 1.1630 mark. Find out more in our analysis for 26 May 2026.

EURUSD forecast: key takeaways

• The Federal Reserve may maintain a hawkish stance longer than previously expected
• The European Central Bank is providing fundamental support for the euro
• The likelihood of an ECB interest rate hike is 85%
• EURUSD forecast for 26 May 2026: 1.1675

Fundamental analysis

The EURUSD forecast takes into account that the pair remains dependent on statements from the White House. Remarks about progress are colliding with the reality of military strikes, forcing the dollar to experience short-term surges in safe-haven demand.

The market continues to reassess interest rate expectations, with investors increasingly pricing in the likelihood that the Federal Reserve will maintain a hawkish stance longer than previously expected, while the probability of a rate hike before the end of the year is gradually increasing.

This week, the key macroeconomic event will be the release of the PCE index on Thursday. The data will show how persistent inflationary pressure in the US remains. High readings will strengthen the dollar, while weak figures will weaken it. In addition, the market continues to adapt to the new Federal Reserve Chairman Kevin Warsh, whose rhetoric is expected to be more hawkish than Powell’s.

While geopolitics is unsettling the market, the European Central Bank is providing the euro with fundamental support. ECB Governing Council member Martin Kocher said that the central bank is increasingly leaning towards a rate hike at the June meeting.

The fundamental analysis for 26 May 2026 takes into account that the EURUSD pair is at a crossroads. US military strikes on Iran and hopes for diplomacy are competing for market attention, creating swings in the pair. The ECB is preparing for a rate hike, with the probability standing at 85%, which gives the euro fundamental support, but without real progress in negotiations, this hawkish trump card remains secondary.

Technical outlook

On the H4 chart, the EURUSD pair formed a Hammer reversal pattern near the lower Bollinger Band. At this stage, quotes may continue their upward movement following this signal. Since they remain within an ascending channel, the 1.1675 resistance level could act as the upside target. A breakout above this mark would open the door for continued upward momentum.

At the same time, today’s EURUSD forecast also suggests another market scenario, with quotes forming a corrective wave and testing the 1.1590 support level. After rebounding, they may continue their upward trajectory.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: downward with risks of bullish momentum
• Key resistance levels: 1.1675 and 1.1730
• Key support levels: 1.1590 and 1.1510

EURUSD trading scenarios for today

Main scenario (Buy Stop)

A confident breakout and consolidation above the 1.1675 resistance level would indicate an upward wave.

• Take Profit: 1.1730
• Stop Loss: 1.1650

Alternative scenario (Sell Stop)

A breakout below the 1.1590 support level would increase pressure on the EURUSD rate, which could trigger a deeper decline.

• Take Profit: 1.1510
• Stop Loss: 1.1615

Risk factors

Geopolitics and signals from the Federal Reserve and the ECB remain the key risks to the EURUSD upside scenario. Additional pressure on the EURUSD pair could arise in the event of a new wave of disagreement between the US and Iran.

Summary

The euro attempted to regain lost ground amid emotional swings between the US and Iran. Technical analysis suggests growth towards the 1.1675 level after the correction.

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