Rising oil prices and Fed expectations limit the potential for the EURUSD to strengthen

Geopolitical factors and extreme heat in Europe are putting additional pressure on the EURUSD rate, which currently stands at 1.1440. Discover more in our analysis for 20 July 2026.

EURUSD forecast: key takeaways

• The European Central Bank will meet this week, on Thursday
• Extreme heat and low water levels in the Rhine River have led to increased logistics costs and fuel supply disruptions
• In France, high water temperatures limited the cooling of nuclear reactors
• EURUSD forecast for 20 July 2026: 1.1550 and 1.1400

Fundamental analysis

The EURUSD forecast takes into account that the pair continues its correction after reaching this month’s highs.

Rising geopolitical tensions are pushing oil prices higher, boosting expectations of hawkish Fed policy. Investors are fleeing to the dollar as a safe-haven asset, putting direct pressure on the EURUSD rate. However, against this backdrop, the euro continues its attempts to strengthen, testing the 1.1473 level last week after the US data release.

In addition to external geopolitical pressure, internal factors are weakening the euro. This week, on Thursday, the European Central Bank will hold its meeting. The market is pricing in, almost entirely, that the rate will remain unchanged at 2.25%. The main intrigue is the future guidance: most economists expect the next hike to come in September, not earlier.

The closure of the Strait of Hormuz is already pushing energy prices higher. Extreme heat and the falling water level of the Rhine, a key transport corridor for petroleum products, have increased logistics costs and disrupted fuel supplies. In France, high water temperatures limited the cooling of nuclear reactors, reducing electricity generation by almost 14%.

These two energy shocks are creating risks of so-called stagflation, a combination of high inflation and slowing economic growth, which may become a bearish scenario for the euro.

Technical outlook

On the H4 chart, the EURUSD pair formed a Hanging Man reversal pattern near the upper Bollinger Band. At this stage, quotes may continue to form a corrective wave as the signal plays out, with the downside target at the 1.1400 support level. A rebound from this mark would open the door for continued upward momentum.

At the same time, today’s EURUSD forecast also suggests another scenario. Quotes may continue to rise and test the 1.1550 resistance level.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: bullish
• Key resistance levels: 1.1475 and 1.1550
• Key support levels: 1.1400 and 1.1305

EURUSD trading scenarios for today

Main scenario (Sell Stop)

A breakout below the support level, with the price settling below 1.1400, would confirm renewed downward movement and create conditions for opening short positions.

• Take Profit: 1.1305
• Stop Loss: 1.1425

Alternative scenario (Buy Stop)

A breakout above the resistance level, followed by consolidation above 1.1475, would indicate a continued upward wave and create conditions for opening long positions.

• Take Profit: 1.1550
• Stop Loss: 1.1450

Risk factors

The main risk to the bearish EURUSD scenario remains consolidation above the 1.1550 resistance level, which would indicate growing buying pressure and the possibility of the uptrend continuing. A weakening US dollar amid expectations of a more accommodative Federal Reserve policy could pose an additional threat to sellers.

Summary

Despite the problems linked to extreme heat in Europe, the euro continues its attempts to strengthen against the USD. At the same time, EURUSD technical analysis suggests a correction towards 1.1400 before growth.

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