EUR/USD Morning Brief — July 1, 2026

EUR/USD starts the morning session consolidating near 1.1400, experiencing localized pressure amid broad-based greenback strength across global markets. Intraday price action remains bounded by strong overhead technical resistance at 1.1450, while immediate short-term support rests within the 1.1390 – 1.1400 zone.

Aggressive institutional positioning underpins this renewed demand for the US dollar. According to the latest Bloomberg data, hedge funds have ramped up their net-long USD positions to the highest level since January 2025. The dollar's dominant safe-haven status is further underscored by the capitulation of the Japanese yen, which collapsed to a fresh low since 1986 against the greenback despite active foreign exchange interventions from the Bank of Japan. While the long-term trend toward dedollarization remains a structural theme, with a recent OMFIF survey revealing that more central banks plan to reduce rather than increase their dollar allocations over the next decade for the first time in history, immediate liquidity dynamics favor the greenback.

Fresh macroeconomic prints show US M2 money supply growth accelerated to 5.6% year-over-year in May, hitting a record high of $23.1 trillion. This recovery marks the fastest annual expansion since July 2022, signaling an end to the period of outright monetary contraction and reflecting a gradual normalization of liquidity conditions that could fuel future inflationary pressures.

Market Outlook: The path of least resistance for the currency pair remains skewed toward the downside into the upcoming sessions. Tactical positioning favors initiating short allocations on brief intraday counter-trend moves up toward 1.1450. A verified downside break below the 1.1380 level will likely accelerate selling momentum, opening a direct path toward 1.1320.