The euro continues to weaken against the US dollar, even though some European politicians are no longer as soft in their statements as they once were. In an interview, Bundesbank President Joachim Nagel urged caution regarding the European Central Bank's next steps on interest rates. His comments came amid growing concerns over the persistence of inflation in the eurozone and the potential impact of further monetary easing.

Nagel emphasized that despite a slight decline in inflation in recent months, upward risks remain due to Trump's trade tariffs. He noted that underlying inflationary pressures—excluding volatile components such as energy and food prices—remain persistent, pointing to the need for continued vigilance.

The Bundesbank President also voiced concerns about potential risks to economic growth. He pointed out that the European economy is already facing several challenges, including the consequences of US tariffs and global uncertainty. Nagel called for a more measured and gradual approach to monetary policy changes. He suggested the ECB should closely monitor economic data and assess the cumulative effects of previous rate cuts before making further decisions. He also stressed the importance of clear communication with markets to avoid unexpected shocks and ensure a smooth adjustment to changing conditions.

In his words, monetary policy now "requires a firm hand," adding that September would likely be an appropriate time for a "reassessment" of the situation.

Following eight rate cuts between June 2024 and June 2025, the ECB is expected to keep rates unchanged at the July meeting. However, more clarity is anticipated at the September 10–11 meeting, when new economic forecasts will be published.

"President Donald Trump's recurring tariff-hiking policy casts a shadow over the outlook," Nagel said, adding that its impact on inflation is highly uncertain. "Uncertainty over tariffs puts pressure on financial markets and harms economic development," he told a German newspaper. "The European Union's goal should be a swift agreement with the US," Nagel said, "but not at any cost."

EUR/USD Technical Outlook:At the moment, buyers need to focus on reclaiming the 1.1625 level. Only then will it be possible to aim for a test of 1.1660. From there, a move to 1.1690 could follow, though doing so without support from major players may prove difficult. The ultimate upward target would be the 1.1720 high. If the instrument declines, I expect any serious buyer activity to emerge only around 1.1590. If there are no buyers there, it may be worth waiting for a new low at 1.1550 or opening long positions from 1.1495.

GBP/USD Technical Outlook:Pound buyers need to reclaim the nearest resistance at 1.3420. Only then will it be possible to aim for 1.3464, a level that will be difficult to breach. The furthest upward target would be the 1.3500 level. In the event of a decline, bears will attempt to take control at 1.3375. If successful, a breakout below this range would deal a serious blow to the bulls and push GBP/USD down to the 1.3335 low, with a potential move toward 1.3290.