EUR/USD Exchange Rate Today: Euro Steadies Near 1.1300 as Dollar Softens on Fed Rate Cut Bets

The euro held firm against the US dollar in early European trade on Monday, with the EUR/USD pair hovering around the 1.1290–1.1310 range as currency markets reopened for the first trading session of June. The pair has been one of the most closely watched in global foreign exchange markets this year, shaped by diverging monetary policy trajectories between the Federal Reserve and the European Central Bank, as well as shifting sentiment around global economic growth.

The dollar index, which measures the greenback against a basket of six major currencies, slipped modestly at the start of the week, providing a degree of support for the euro. Market participants continued to price in the possibility of further Federal Reserve interest rate cuts later in 2026, following a string of softer-than-expected US economic data releases in recent weeks. PCE inflation figures, the Fed's preferred gauge of price pressures, showed continued disinflation momentum, reinforcing the case for easing. Fed funds futures markets have been reflecting expectations of at least one to two additional quarter-point cuts before year-end, a dynamic that has weighed on the dollar since early spring.

On the eurozone side, the picture remains more nuanced. The European Central Bank delivered a rate cut earlier in May, bringing its deposit facility rate lower as inflation across the bloc continued its gradual descent toward the 2% target. ECB policymakers, however, have struck a cautious tone on further easing, with several Governing Council members stressing data dependency ahead of any additional moves. Eurozone inflation data for May, due later this week, will be closely scrutinised for clues on the ECB's next step, with economists forecasting a headline figure in the range of 2.1–2.3% year-on-year.

Technically, EUR/USD has been consolidating within a relatively narrow band after the pair's notable rally earlier in the year, which saw it climb from lows near 1.0200 to multi-month highs above 1.1400. Analysts point to the 1.1250 area as a key near-term support, while resistance is seen at the 1.1400–1.1420 zone. A sustained break above that upper band could open the way toward levels not seen since 2021, though many traders remain cautious given the uncertain macro backdrop.

The broader geopolitical and trade environment also continues to cast a shadow over currency markets. Ongoing negotiations around US tariff policy have introduced volatility in risk sentiment, which in turn has influenced safe-haven flows into and out of the dollar. Any escalation in trade tensions tends to benefit the greenback as a reserve currency, while periods of de-escalation have provided room for the euro to advance.

Retail trading activity in EUR/USD has remained robust across major platforms. Firms such as eToro, which operates under FCA, CySEC and ASIC regulation, have noted continued strong engagement with major forex pairs among their user base, reflecting broad retail interest in dollar-denominated moves.

Looking ahead to the rest of the week, investors face a packed data calendar that is likely to set the tone for EUR/USD through June. US ISM manufacturing data, due Monday, will offer an early read on the health of the American industrial sector. Later in the week, Friday's US non-farm payrolls report for May is expected to be the single most important data release for the currency pair. Consensus forecasts point to a figure of around 150,000–175,000 new jobs, with any significant deviation likely to trigger sharp moves. A materially weaker reading would amplify Fed cut expectations and weigh on the dollar, potentially pushing EUR/USD back toward the top of its recent range, while a strong number could revive dollar demand and put pressure on the pair.

Outlook: The short-term bias for EUR/USD leans modestly higher, supported by dollar softness and continued expectations for Fed easing. However, the path is unlikely to be linear. The pair faces event risk on multiple fronts this week, from eurozone CPI to US payrolls, and traders should brace for elevated intraday volatility. Medium-term, the currency pair's trajectory will hinge on whether the Fed moves more aggressively than the ECB in cutting rates — a scenario that would sustain upward pressure on the euro — or whether eurozone growth data disappoints sufficiently to shift the balance back in the dollar's favour. For now, range-bound trading between 1.1250 and 1.1400 appears the most likely near-term scenario, with the direction of the next breakout to be determined by the data flow in the weeks ahead.