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EUR/USD comes under selling pressure on Friday as the US Dollar (USD) strengthens following the release of the upbeat United States (US) employment report. At the time of writing, the pair trades around 1.1605, down roughly 0.18% on the day, after retreating from an intraday high of 1.1633.

US Nonfarm Payrolls (NFP) rose by 162K in August, comfortably beating expectations for a 56K increase. July’s reading was revised sharply higher to a gain of 21K from the previously reported 23K decline, while June payrolls were revised to 31K from 20K. The Unemployment Rate held steady at 4.1%, as expected.

The US Dollar strengthens following the employment report, while US Treasury yields also move higher across the curve. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.20 after falling to a more-than-one-week low of 98.83 on Thursday. Meanwhile, the benchmark 10-year Treasury yield retests 4.81%, its highest level since October 2023, touched earlier this week.

The stronger employment figures revive expectations that the Federal Reserve (Fed) could raise interest rates at its September 15-16 meeting. Still, the jobs report may not settle the September policy debate on its own. Next week’s Consumer Price Index (CPI) and Producer Price Index (PPI) data will give policymakers a clearer picture of inflation before the Fed announces its decision.

On the Euro (EUR) side, weaker-than-expected Eurozone Retail Sales add some pressure. However, expectations that the European Central Bank (ECB) will raise interest rates at its September 9-10 meeting could limit the Euro’s losses. The ECB is widely expected to deliver a second rate hike this year as higher Oil prices amid tensions in the Middle East keep inflation risks elevated.

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHFUSD0.18%0.15%0.09%0.42%0.10%0.11%0.44%EUR-0.18%-0.03%-0.09%0.27%-0.09%-0.05%0.26%GBP-0.15%0.03%-0.04%0.29%-0.05%-0.02%0.28%JPY-0.09%0.09%0.04%0.34%-0.01%0.03%0.33%CAD-0.42%-0.27%-0.29%-0.34%-0.35%-0.32%-0.01%AUD-0.10%0.09%0.05%0.00%0.35%0.03%0.33%NZD-0.11%0.05%0.02%-0.03%0.32%-0.03%0.30%CHF-0.44%-0.26%-0.28%-0.33%0.00%-0.33%-0.30% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

EUR/USD rose to 1.1627. The US dollar fell sharply yesterday and remains under pressure today. Pressure on the US currency intensified after a Federal Reserve official made more dovish comments, prompting markets to scale back expectations for a September rate hike.

Federal Reserve Governor Christopher Waller stated that he would support keeping rates unchanged if price pressures continue to ease. According to him, the next policy decision will largely depend on August inflation data, due for release next week.

Markets now put the probability of a September rate hike at approximately 50%, down from around 63% the previous day. Friday’s US labour market report for August will provide another important signal and could significantly shift market expectations for Fed policy.

Another factor weighing on the dollar has been the yen’s sharp appreciation. Investors are monitoring the risk of currency intervention while also assessing the likelihood of more aggressive Bank of Japan policy tightening before year-end.

Technical analysis

On the H4 chart of EUR/USD, the market is moving lower towards 1.1611. A consolidation range is currently forming around this level. A move higher towards 1.1657 is possible, followed by a further decline to 1.1555. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downward, indicating continued bearish momentum and scope for further downside.

On the H1 chart, the market has completed another downward move to 1.1625. A consolidation range is currently forming around this level. A move lower towards 1.1611 is expected today, followed by a rebound to 1.1657. The Stochastic oscillator supports this scenario, with its signal line below 50 and pointing firmly downward towards 20.

ConclusionEUR/USD has gained ground as the dollar retreats following dovish comments from Fed Governor Christopher Waller, who signalled a preference for keeping rates unchanged if inflation continues to ease. The implied probability of a September rate hike has fallen from 63% to 50%, with markets now focused on Friday’s US jobs report and next week’s inflation data for further guidance. The sharp appreciation of the yen has also contributed to dollar weakness, as investors weigh intervention risks and the prospect of more aggressive BoJ tightening. Technically, the pair may see a near-term bounce towards 1.1657 before resuming its broader bearish trend towards 1.1555. The US labour market report will be the key catalyst for the next directional move.

ING’s Chris Turner writes that EUR/USD is grinding higher as markets reverse the earlier sell-off triggered by Kevin Warsh’s speech, with the pair moving back toward 1.1650. A softer Dollar backdrop versus EMFX and pro-growth G10 currencies supports the Euro. Turner also flags German local election risks and sees EUR/GBP holding a range before a potential move to 0.87 in the fourth quarter.

Euro benefits from softer Dollar tone"EUR/USD is drifting higher as markets unwind the moves made on the back of Warsh's speech a week ago. EUR/USD had been trading around 1.1650 before that speech and looks to be grinding back in that direction now."

"The generally offered dollar environment against EMFX and pro-growth currencies in the G10 space is creating a supportive environment for EUR/USD – even if the Fed story is uncertain."

"One left-field risk for the euro is the upcoming local elections in Germany. Major success for the AfD in Sunday's Saxony-Anhalt elections may raise more questions over the stability of Friedrich Merz's government."

"Elsewhere, EUR/GBP is consolidating after breaking above 0.86 yesterday. No doubt the gilt sell-off, and what it means for strained UK public finances, played a role there."

"It seems too early to get the all-clear on inflation, meaning that up to 60bp of BoE tightening can sit in UK money markets for a while longer. That probably means EUR/GBP can trade 0.8550-0.8600 before breaking higher to 0.87 in the fourth quarter."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Possible intervention again by the BOJ has led the USDJPY to plunge leading to a dip in the Dollar Index as well ahead of the NFP data release today. Euro and EURINR head towards 1.17 and 110-110.50 respectively while EURJPY has also plunged below 182 and looks bearish for a test of 180. Aussie could rise towards 0.73 while the Pound could test 1.3450 before rebound from there. USDCNY is headed towards 6.71/70. The Indian Rupee has scope to strengthen to 94 before seeing a reversal.

The US Treasury Yields remain higher and stable. Outlook remains bullish. There is room to rise more. Any dip from here can be short-lived as supports are there to limit the downside. The US unemployment data release today will need a close watch. The German Yields are hovering around their key resistance. A strong follow-through rise is needed to go further higher. Else the yields can fall back. The 10Yr GoI has come down but sustains above its support. Short-term picture remains positive. But, an intermediate dip looks likely before the yield goes higher.

Dow has turned stronger after breaking above 53000 and can rise towards 54500-55000 on a break above 54000. DAX has bounced back and can rise towards 26500. Nifty remains weak below 24000, with support near 23800 needing to hold to avoid a decline towards 23600. Nikkei remains weak and can decline towards 62000. Shanghai is likely to remain range-bound between 3850-4000 while below 4000.

Brent and WTI continue to move higher and can rise towards $100 and $95 respectively. Gold has bounced sharply after stronger US ADP jobs data, but needs to sustain above $4600 for a rise towards $4700-$4800. Silver has also recovered and needs a sustained break above $70 for a move towards $75-$80. Copper remains range-bound between $6.50-$6.80, while Natural Gas remains weak and needs to break above $3.00 for a rise towards $3.25-$3.50.

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EUR/USD attracts buyers on Thursday as a sharp rally in the Japanese Yen (JPY), softer United States labour-market data and a pullback in US Treasury yields weigh on the US Dollar (USD). At the time of writing, EUR/USD trades around 1.1622, up roughly 0.30% on the day.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.00, near a one-week low, after reaching 99.86 on Wednesday, its highest level since August 14. Meanwhile, the benchmark 10-year US Treasury yield falls for the second consecutive day to around 4.74%, retreating from 4.81%, its highest level since October 2023.

Dovish comments from Federal Reserve (Fed) Governor Christopher Waller prompt traders to scale back bets on a rate hike this month. Waller said he is “finally seeing some signs of disinflation in recent data” and that the “rate decision in September hinges on August inflation.” He added that he would support keeping interest rates unchanged if the August data confirm recent progress.

Waller also said the Fed’s mandate is to achieve “price stability and full employment, not financial conditions,” adding that the current interest-rate setting “could get us back to 2% inflation.”

According to the CME FedWatch Tool, the probability of a rate hike at the Fed’s September 15-16 meeting has fallen to around 48% from 63% a day earlier.

Meanwhile, mixed US economic data offers conflicting signals. Initial Jobless Claims increased to 206K in the week ending August 29, slightly above the market forecast of 205K and the previous reading of 204K. However, the ISM Services PMI rose to 55.4 in August from 54.1 in July, exceeding expectations of 54.3. The Prices Paid and Employment indices increased to 72.6 and 47.8, respectively. Traders now await Friday’s Nonfarm Payrolls (NFP) report for fresh clues on the Fed’s monetary policy outlook.

Across the Atlantic, the European Central Bank (ECB) is widely expected to raise interest rates at next week’s monetary policy meeting. The move would mark the second rate hike this year as the central bank seeks to curb inflation, which has been driven largely by elevated Oil prices linked to the war in the Middle East.

A Reuters poll showed that all 65 economists surveyed expect the ECB to raise its Deposit Facility Rate by 25 basis points to 2.50% on September 10. Around 91% expect the rate to stay at 2.50% through the end of the year, while 78% see it holding at that level through mid-2027.

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.

USDEURGBPJPYCADAUDNZDCHFUSD-0.29%-0.18%-2.02%-0.31%-0.28%-0.32%-0.59%EUR0.29%0.10%-1.75%-0.08%0.01%-0.10%-0.31%GBP0.18%-0.10%-1.85%-0.16%-0.09%-0.18%-0.41%JPY2.02%1.75%1.85%1.72%1.78%1.67%1.45%CAD0.31%0.08%0.16%-1.72%0.04%-0.06%-0.27%AUD0.28%-0.01%0.09%-1.78%-0.04%-0.08%-0.30%NZD0.32%0.10%0.18%-1.67%0.06%0.08%-0.19%CHF0.59%0.31%0.41%-1.45%0.27%0.30%0.19% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The EUR/USD rate has rebounded to 1.1610, while UniCredit sees a Fed-Treasury policy clash becoming a medium-term Dollar headwind. The Euro to Dollar (EUR/USD) exchange rate has climbed back to around 1.1610 after recovering from a 48-hour low of 1.1567.

The Euro is up roughly 0.2% on the day, although the prospect of another Federal Reserve rate hike continues to offer the Dollar near-term support.

Markets are assigning around a two-thirds probability to a September increase following Fed Chair Kevin Warsh's hawkish Jackson Hole speech.

UniCredit accepts that the repricing has helped the US currency, but strategist Roberto Mialich sees a more difficult medium-term picture.

Image: EUR/USD 48hr chart The 48-hour chart shows EUR/USD recovering steadily from below 1.1570, with the pair pushing towards the top of its recent range around 1.1610.

Fed Hike Expectations Support the Dollar UniCredit said: “The USD’s reaction has been exactly as expected, as Warsh’s speech has forced investors to reprice expectations regarding US monetary tightening – correcting the excessive optimism regarding limited rate-hike prospects following a series of weak US macro-data releases earlier this month.”

A rate increase by December was already fully priced when UniCredit published its assessment.

However, Mialich doubts that investors will price a much steeper tightening path without stronger US data or a further change in the Fed's language.

“That said, forward curves are unlikely to price in more aggressive monetary moves unless US data surprise sharply to the upside or the Fed signals an even more hawkish stance regarding the timing and magnitude of its tightening strategy.”

That gives the Dollar room to hold firm in the short term, but UniCredit's argument stretches beyond the next Fed meeting.

Treasury and Fed Objectives Could Collide The US Treasury is trying to contain borrowing costs as the budget deficit approaches 6.3% of GDP and public debt exceeds $40 trillion.

Its planned buyback operation will run from 9 September to 4 November, with purchases of longer-dated Treasuries financed through additional short-term bill issuance.

That strategy is intended to flatten the yield curve and reduce pressure at the long end.

A hawkish Fed would be pulling in the opposite direction by raising short-term rates and tightening financial conditions.

“Although the USD has gained from the repricing of overly dovish rate expectations, a collision between fiscal and monetary policy could emerge as a medium-term drag on the currency.”

Could “Sell America” Return? UniCredit argues that conflicting policy objectives could revive concerns about US fiscal credibility and encourage investors to reduce their Dollar exposure.

“However, the risk of a collision course between US fiscal and monetary policies may increase significantly if they were to pursue opposing goals on interest rates. This could act as a headwind for the USD in the medium term – regardless of signs of potential escalation in the Middle East – by further fuelling “sell America” trades and the de-dollarization process.”

The beneficiaries could include the Euro, precious metals, real estate and selected cryptocurrencies.

For EUR/USD, UniCredit offers a direction rather than a formal price target.

Its view also fits the longer-term bias in our latest bank forecast survey, which sees the pair rising towards 1.18 over the coming quarters.

The next tests will be US payroll and inflation data, the September Fed decision and the Treasury buyback beginning on 9 September.

Markets will also watch the shape of the US yield curve and whether fiscal concerns start to outweigh the Dollar's near-term interest-rate advantage.

After waiting for months and years for some real JPY strength, are we really seeing it, or is it temporary?

The big move started yesterday when a Bank of Japan board member said that a 25 basis point rate increase is “not necessarily set in stone” and that back-to-back rate hikes are possible.

In today’s Market Outlook, let’s take a look at Forex trading on the Dow Jones Industrial Average, WTI Crude Oil, EURUSD, EURCAD, NZDJPY, and USDJPY.

So? We have seen many attempts at Yen strength, and we need to see if this one sticks.

It hasn’t in the past.

Meanwhile, on USD/JPY, we see an oversold stochastic oscillator and strong indications of strong bearish trends on the ADX.

Of course, this is no guarantee of a reversal to the upside, and we see key levels of support at 157 and 156 yen.

Take a look at all your JPY pairs as we see similar price action.

On NZDJPY, however, we are in a ranging market on the daily chart with clear levels of support.

Watch your technicals on all JPY pairs and the news, of course.

The BoJ will be meeting this month, 18 September, to decide on the interest rates, so expect volatility between now and then.

Yesterday, we saw the BoC keep interest rates on hold, but during the press conference there was talk of rate rises, so we saw CAD strength.

On the EURCAD daily chart, we see that we are in a ranging market with key support and a possible descending triangle.

On lower time frames, we will look for the reversal.

But watch tomorrow for Canadian Employment figures and the US Non-Farm Payrolls.

USD is still out of kilter from last week’s remarks by the new Fed chair, and we see EURUSD settling back into a downtrend that started a couple of weeks ago.

Again, check your USD and CAD charts and watch out for tomorrow’s Employment reports and NFPs.

We see a pullback in the price of oil as the White House is saying the latest campaign against Iran won’t last too long.

But, in the next breath, there was talk of further strikes.

The moral of the story is, be careful and watch your risk management.

If you are following the US indices, watch out for the NFPs tomorrow and keep an eye on the Dow Jones Industrial Average, where we see price at the lower trend line and technical signals of a potential reversal.

By

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Published: Sep 3, 2026, 07:47 GMT+00:00

$1.35009

+0.13%

Key Points:ADP employment rose by 38,000 versus 48,000 expected, reinforcing signs that U.S. hiring momentum is cooling.Friday's Nonfarm Payrolls report is now the crucial test for whether markets maintain elevated September Fed hike expectations.The ECB retains a comparatively hawkish backdrop as higher eurozone inflation keeps further tightening expectations alive.

GBP/USD

+0.13%

GBP/USD ForecastEUR/USD

+0.14%

EUR/USD ForecastUS Dollar News: Soft ADP Data Tests Fed Hike Conviction The greenback has begun the month with its momentum challenged by the more recent labor data. The August ADP report was 38,000 compared to the 48,000 report that economists expected, and also showed a loss of jobs in manufacturing as well as professional and business services. The report supports signs of cooling hiring, and was lower for Treasury yields. Even with the reports, futures still hint at a 60%–65% likelihood of a rate hike in September by the Fed. Fed Chair Kevin Warsh also kept a hawkish stance at Jackson Hole with his speech, keeping expectations of a rate hike high. Friday’s employment data will be the last big report with the potential to change expectations, and a weak report will drop the likelihood of a rate hike.

The euro still supports a firm policy with eurozone inflation reaching 3.3% in August from July’s 2.9%. This increase was largely due to the Iran conflict and the resulting energy costs. The markets have priced in the expected 25 basis point increase with the deposit rate most likely to reach 2.50% for this hike. With core inflation reaching 2.4%, a more cautious slow pace of tightening is expected, rather than a prolonged hiking period.

Sterling is facing the harder of the two domestics. Gilt yields for the ten year have reached their highest level since 2007 at 5.294% with energy costs, inflation, and fiscal concerns and spending all reaching a high prior to the October budget. The BoE is still expected to hold Bank Rate at 3.75% in September, but a 25 basis point hike is expected in the coming year at later dates.

The movement of the FX theme for September 3 is expected to be data-dependent. Soft U.S. hiring diminishes the conviction of the Fed Funds rate hike, and the ECB retains the most compelling case for forward tightening. In the meantime, fiscal stress is holding back GBP, despite higher than desired inflation.

For September 3, the FX theme appears to be increasingly data dependent. Soft U.S. hiring diminishes the conviction of the Fed Funds rate hike, and the ECB maintains the most persuasive case for front-running tightening.

U.S. Dollar Index Technical Analysis: DXY Breaks Rising Structure as 99.12 Support Comes Into Focus Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Indexis currently trading at 99.23 on the 2-hour chart after dropping below the recovering channel from the August lows. What is interesting is how quickly the index was rejected at the 99.80 – 99.86 range. DXY lost 99.62, 99.48, and 99.35 very quickly, which shows how much the structure of the bullish recovery has weakened.

The first area I will be watching is 99.12, as the downwards support zone begins there. Breaking below this would expose 98.90, 98.72, and 98.56. In the opposite direction, looking at the previous support zone of 99.35 – 99.48 and adding 99.62, the resistance zone starts to form there.

RSI has dropped and begun to enter oversold territory, so a bounce in the index is possible, but I also believe that the DXY will drop furtherwhen trading below the 99.48 range. I will reverse that opinion if the index breaks above the 99.62 range, but I believe the rallies will be corrective in nature rather than a strong downtrend.

GBP/USD Technical Analysis: Sterling Bounces From 1.3477 but 1.3526 Resistance Keeps Bears in Control

GBP/USD Price Chart – Source: Tradingview Currently, GBP/USD is trading at the 1.3500 level on the 4-hour chart as price rebounds from the support zone of 1.3477. What I want to point out is that price is bouncing out of a support zone, but is below both moving averages and the 1.3526 support area which is now an area of resistance.

1.3526 is the first resistance area, followed by the resistance area of 1.3565 and 1.3601. Beyond those, resistance is expected to cluster around the area of 1.3656-1.3676. 1.3477 is the next support area, with potential support at 1.3435 and 1.3400 should 1.3477 break.

RSI is recovering from deeply oversold territory. This leads to believing that the pair may continue to climb, however, I am still bias to the below 1.3526 and 1.3565 bearish resistance zone. Should 1.3565 bullish resistance zone break, I will black a resistance call. Until then I believe this is a corrective rally in a weaker bullish short-term trend.

EUR/USD Technical Analysis: Euro Rebounds From 1.1571 but 1.1610–1.1625 Is the Real Test EUR/USD Price Chart – Source: Tradingview EUR/USD is currently trading at 1.1608. The pair has been bought aggressively on the 1.1571 support level, and what has been interesting is how quickly the pair has bounced from oversold levels. That said, the level that is currently more important is the previous support zone and the descending trendline.

The pair has bounced directly into the zone, rather than the bounce itself.

1.161–1.1625 and 1.1659 are immediate resistance level regions currently. Above 1.1659, buyers would be focused on 1.1686 and 1.1711. Sellers continue to define 1.1571 as the first major support level on the downside with 1.1547 and ultimately 1.1517.

RSI recovering in oversold territory favors the bullish scenario. I’m neutral, but I favour market bears, as long as EUR/USD is below 1.1625. A decisive close above 1.1625 would lead me to a more bearish outlook. A retest of the area around 1.1571 would also be of interest.

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Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

Latest news and analysis

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that EUR/USD has shifted into short-term range trading between 1.1570 and 1.1610 after a dip to 1.1565 and rebound to 1.1608. They still see scope for a test of 1.1550 unless 1.1630 strong resistance breaks. On a 1–3 month view, a prior decisive upside break keeps medium-term targets at 1.1800 and 1.1850 in focus.

Euro holds range with bearish bias"24-HOUR VIEW: On Tuesday, EUR fell from 1.1624 to 1.1583, settling at 1.1592 (-0.21%). When EUR was at 1.1590 yesterday, we indicated that “while there is room for EUR to dip below Monday’s low of 1.1573, major support at 1.1550 is likely out of reach.” We noted that “resistance is at 1.1605, followed by 1.1620.” We were not wrong, as EUR dipped to a low of 1.1565. However, it subsequently rebounded strongly to 1.1608 before easing to close largely unchanged at 1.1587 (-0.04%). EUR has likely entered a range-trading phase and is expected to trade between 1.1570 and 1.1610 today."

"1-3 WEEKS VIEW: After EUR fell sharply last Friday, in our most recent narrative from Monday (31 Aug, spot at 1.1585), we highlighted that “the rapid increase in downward momentum suggests EUR could decline further.” We also highlighted that “the major support at 1.1550 may not come into view so soon.” Yesterday, EUR dipped to 1.1565 before rebounding. While there has been no further increase in downward momentum, there is still a chance for EUR to decline to 1.1550. Overall, only a breach of 1.1630 (‘strong resistance’ level previously at 1.1640) would indicate that EUR is not declining further."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Scotiabank strategists Shaun Osborne and Eric Theoret note EUR/USD has slipped to the upper 1.15s, with sentiment turning bearish despite supportive yield spreads. They link the renewed deterioration to rising Oil prices and concerns over Euro area terms of trade. Spot is now drifting below their narrow fair value estimate of 1.1619, and technical focus has shifted toward lower support levels.

Bearish sentiment outweighs spread support"The EUR is soft, down a modest 0.2% vs. the USD with a drift to a fresh two week low into the upper-1.15 area. The domestic release calendar has once again quieted down, forcing market participants to focus on broader themes."

"Measures of EUR sentiment have shifted bearishly over the past week or so, ending a brief period of bullish-leaning risk reversals in mid/late August."

"The renewed deterioration looks to have coincided with the latest recovery in oil prices, sparking concerns about the euro area’s terms of trade as a major energy importer. "

"The support offered by higher yield spreads appears to be overwhelmed by the turn in sentiment, with spot drifting below our narrow FV estimate at 1.1619."

"EUR/USD short-term technicals: Neutral – the RSI is still close to the neutral threshold at 50 but it has just – barely – broken below into bearish territory. The latest bearish turn in EUR has shifted our focus to the downside, and we now look to near-term support at 1.1520 following the latest drift below 1.1580."

"We also note the potential for additional support closer to the 50 day MA (1.1499). Near-term resistance is expected in the 1.16/1.1620 range. The medium-term range from mid-2025 remains flat with wide congestion centered around the mid-1.16s."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

EUR/USD consolidates its daily losses during American trading hours on Wednesday as the US Dollar (USD) holds firm, supported by hawkish Federal Reserve (Fed) expectations and escalating tensions in the Middle East. However, weaker-than-expected United States (US) labour market data and a modest pullback in US Treasury yields limit the Greenback’s advance. At the time of writing, the pair trades around 1.1580, down -0.11% on the day.

The ADP Employment Change showed that US private-sector payrolls increased by 38K in August, below market expectations of 47K and the upwardly revised July increase of 46K. The figures point to slowing hiring ahead of Friday’s Nonfarm Payrolls (NFP).

US Treasury yields ease across the curve on Wednesday but remain close to recent highs. The benchmark 10-year yield trades around 4.78% after briefly touching 4.81%, its highest level since October 2023. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.74 after reaching a two-week high near 99.87.

New York Fed President John Williams said on Wednesday that “yields are rising on a strong economy and strong outlook,” adding that they “don’t seem to be driven by the inflation outlook.” Williams noted that “there is a correlation between bond yields and the Middle East conflict.”

The broader outlook continues to favour the Greenback as traders increase bets that the Fed could raise interest rates as soon as September, particularly after Fed Chair Kevin Warsh adopted a tougher stance on inflation at the Jackson Hole Symposium last week. According to the CME FedWatch tool, the probability of a rate hike at the September 15-16 meeting stands at around 70%, up from 36% a week ago.

Escalating hostilities between the US and Iran are also supporting the Greenback while weighing on the Euro. The latest exchange of strikes has pushed Oil prices higher, fuelling inflation concerns and raising expectations that major central banks could keep monetary policy restrictive for longer.

Against this backdrop, the European Central Bank (ECB) is widely expected to raise its deposit rate by 25 basis points to 2.50% at its September 9-10 meeting, marking its second increase this year. Preliminary Eurozone inflation data for August showed that the Harmonized Index of Consumer Prices (HICP) accelerated to 3.3% YoY from 2.9% in July, strengthening the case for another rate hike. Looking ahead, the Eurozone Producer Price Index (PPI) is due on Thursday, followed by Retail Sales data on Friday.

Economic Indicator Nonfarm Payrolls The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews ​and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Read more.

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

The Euro-Dollar rate has slipped to 1.1574, but UBS sees recovery towards 1.18–1.20 as limited policy divergence contains FX volatility. The Euro to Dollar (EUR/USD) exchange rate has fallen back to 1.1574 after its late-August recovery ran out of momentum above 1.17.

The reversal has left the live EUR/USD rate near the bottom of its latest trading range, with the pair down around 0.15% on Wednesday morning.

At current levels, the bottom of UBS’s 1.18–1.20 forecast range would represent an advance of roughly 2%, while the upper boundary implies potential gains approaching 3.7%.

Image: EUR/USD 48-hour chart The 48-hour chart captures the change in tone: EUR/USD briefly touched 1.1624 before sliding towards 1.1573, just above the period low of 1.1568.

Neutral Euro View, Higher EUR/USD Range UBS stated: “We remain Neutral on the EUR and expect EURUSD to move back between 1.18-1.20, while GBP and NOK remain Attractive given their yield appeal.”

UBS is not predicting a powerful, one-way Euro rally, but it does expect the recent Dollar rebound to fade enough for EUR/USD to revisit higher levels.

The bank’s view rests partly on the absence of a large and persistent interest-rate gap between the major central banks.

“We believe limited monetary policy divergence should keep FX volatility contained, supportive of selective exposure to pro-growth, carry currencies.”

This leaves UBS broadly aligned with Rabobank’s 1.18 EUR/USD forecast, although the UBS range allows for a more substantial move towards 1.20.

European Growth Offers Some Support The European growth picture is another part of the argument.

UBS said: “Eurozone and UK growth continue to outperform expectations, as higher borrowing costs have had limited impact on activity and higher energy prices have yet to materially weigh on growth (we forecast Eurozone GDP growth of +0.8% in 2026, +1.2% in 2027, and UK: +1.1% in 2026 and 2027).”

It also expects another European Central Bank rate increase: “Thus, we expect the ECB to hike once more in September, to 2.5% before pausing, and the BoE to hold policy rates at 3.75% through year-end 2026.”

Image: EUR to USD exchange rate 3-month chart The three-month chart offers a less bearish picture than the latest sell-off alone, with EUR/USD still above its rising 50-day moving average despite retreating from August’s 1.1711 high.

The immediate tests will come from US employment data and the September ECB decision.

Further Dollar strength could put 1.15 back in play first, but a cooling in US yields would bring UBS’s 1.18 recovery target into clearer view.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Euro/US Dollar (EUR/USD): Arc cycle analysis

Overview: Based on Arc Cycle Analysis applied to the 4h chart, Euro / U.S. Dollar is trading between the 0.618 Arc and 0.786 Arc within the current Arc Cycle. Price is oscillating between these boundaries, progressing through a mid-cycle consolidation phase toward the lower Arc level.

Metric

Reading

 Market Bias

Neutral-Bearish

 Preferred Scenario

Two-Way Navigation Within the Current Arc Range

 Target Arc

0.786 Arc

Potential Counter-Move

A counter-move toward the upper Arc may occur before bearish continuation.

 Current Arc Level

In Transit Between Arcs (0.618 Arc to 0.786 Arc)

 Cycle Status

Mid-Cycle Migration Phase

Market outlookPrice is actively trading between the 0.618 Arc and the 0.786 Arc, indicating that the market is navigating through the current Arc Cycle toward the lower Arc boundary. While price may experience a pullback toward the 0.618 Arc, the broader cycle structure remains oriented toward a test of the 0.786 Target Arc.

The EUR/USD pair loses traction to near 1.1575 during the early European session on Wednesday. The US Dollar (USD) strengthens against the Euro (EUR) amid hawkish Federal Reserve (Fed) stance and escalating Middle East geopolitical tensions. Traders will keep an eye on the Eurozone Retail Sales and US employment data, which are due on Friday. 

Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed it has launched a “heavy” ballistic missile attack on Prince Hassan airbase and a US Marine base in Jordan in response to earlier US strikes that killed civilians. 

The US military said that its forces completed a wave of strikes against Iranian targets on Tuesday after what it said were attempted attacks by Iran against commercial shipping and American service members. Signs of rising tensions in the Middle East boost the safe-haven flows, supporting the Greenback and creating a headwind for the major pair. 

Furthermore, Fed Chair Kevin Warsh’s hawkish remarks at the Jackson Hole symposium might contribute to the USD’s upside. Warsh warned last week that policymakers may need to tighten again if inflation fails to move convincingly towards 2%. Traders raise their bets on a September rate hike after Warsh’s comments.

Expectations of a September Fed rate hike rose to 68%, up from below 40% before the speech, according to the CME FedWatch tool.  

Eurozone inflation risks keep ECB bias tilted toward further tighteningBNY’s Geoff Yu highlights that ECB officials remain wary of the inflation outlook, noting that one policymaker “warned that prolonged disruption could sustain inflation pressure even without a wage-price spiral.” According to Yu, “that framing reinforces the path toward another ECB hike in September”: in his view, “policymakers appear increasingly unwilling to wait for second-round effects before acting,” with the ECB “more assertive than its peers” in leaning against the risk that price pressures become entrenched.

Technical Analysis: EUR/USD retains a neutral outlook in the near termIn the daily chart, EUR/USD sits just above the 100-day simple moving average (SMA), which lends immediate support, but it remains below the 20-day Bollinger middle band, leaving spot marginally capped within its recent range. The Relative Strength Index (RSI) at 49.8 is effectively neutral, suggesting directionless momentum as price consolidates between nearby support and overhead resistance bands.

On the topside, the immediate resistance level is located at 1.1600, representing the Bollinger middle band and the psychological level. A more significant barrier is seen at the upper Bollinger band near 1.1710, where recent rallies would likely face supply. 

On the downside, immediate support is defined by the 100-day SMA at 1.1565. A break below this level would expose the lower Bollinger band around 1.1490, opening the door to a deeper pullback within the broader consolidation.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

The shared currency edges lower, capped by the 200-day Simple Moving Average (SMA) at 1.1633, amid rising geopolitical tensions and escalating hostilities between the US and Iran, prompting investors to buy the US Dollar. At the time of writing, the EUR/USD trades at 1.1590, down 0.25%.

The EUR/USD retreats below the 200-day SMA towards the 100-day SMA at 1.1569, the first support area.  The Relative Strength Index (RSI) I above 50, bullish but aims lower, a signal that sellers are gaining strength.

For a bearish continuation, the EUR/USD must clear the 100-day SMA. This will expose the August 13 swing low of 1.1511, followed by the 50-day SMA at 1.1494. Below, the next support is the 1.1400 psychological level, before the trend resumes lower highs and lower lows.

Buyers must push the pair above the 200-day SMA, ahead of the 1.1700 psychological level. A decisive breakout will expose the May 6 high at 1.1796.

Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

The Euro (EUR) trades 0.2% lower to near 1.1593 against the US Dollar (USD) during the European trading session on Tuesday. The major currency pair is under pressure as the US Dollar outperforms its peers due to increased expectations that the Federal Reserve (Fed) will raise interest rates in the near term.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, is up 0.2% to near 99.60.

Hawkish Fed expectations are supported by the Fed’s commitment that it will act to bring inflation down to the 2% target.

Fed chair Warsh strikes more hawkish tone on inflation pathAnalysts at Rabobank note that Fed Chair Kevin Warsh “appeared to rebuild some of his credibility as an inflation fighter” in his first address to the annual Jackson Hole Symposium, emphasising that the Fed still has “work to do” to bring inflation back to its 2% target. They argue that the remarks represent “an important shift” from the communication strategy he has followed since taking office, with Warsh, for the first time as Chair, explicitly voicing dissatisfaction with recent inflation developments.

Rabobank highlights that Warsh also signalled he was open to further rate hikes unless underlying inflation shows a more convincing improvement. As he put it, “We must be convinced that underlying inflation is moving toward our target clearly and at a sufficient pace. Otherwise, we still have work to do.”

Meanwhile, investors shift their focus to the United States (US) ISM Manufacturing PMI data for August and the US JOLTS Job Openings data for July, which will be published at 14:00 GMT.

On the Eurozone front, the preliminary Harmonized Index of Consumer Prices (HICP) data for August comes in higher at 3.3% Year-on-Year (YoY), as expected, against 2.9% in July. The core HICP growth cooled down to 2.4%, while it was expected to remain steady at 2.5%.

EUR/USD Technical Analysis

In the four-hour chart, EUR/USD trades at 1.1594, keeping a bearish near-term tone as it holds beneath the 20-period exponential moving average (EMA) at 1.1618. The pair is capped by this short-term EMA resistance, while the Relative Strength Index (RSI) at 36 stays below neutral, hinting at persistent downside pressure rather than an oversold condition.

On the topside, immediate resistance is defined by the 20-period EMA at 1.1618, which would need to be reclaimed to ease the current bearish bias and allow for a more sustained recovery. Looking down, the 1.1580 level is expected to act as a key support area.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator Harmonized Index of Consumer Prices (YoY) The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

Read more.

Last release: Tue Sep 01, 2026 09:00 (Prel)

Frequency: Monthly

Actual: 3.3%

Consensus: 3.3%

Previous: 2.9%

Source: Eurostat

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Summary:

The EUR/USD remains vulnerable below 1.1621 as USD strength still remains despite Monday's pullback move to the upside. Current Setup Current sentiment: cautiously bearish EUR/USD.

The pair is up 0.33% on the day and trading around 1.1616. The modest intraday recovery comes as traders who were long USD take profits. However, sentiment still favors USD strength, and that is why this bias for EUR/USD is cautiously bearish. The Euro is getting some support from expectations of a potential rate hike by the European Central Bank in September, especially as renewed tensions between the US and Iran have driven oil prices higher and raised concerns about imported inflation in the Eurozone. 

Macro Drivers for the EUR/USD 1) Fed Hawkish Expectations

After the Fed Chair’s hawkish comments at the Jackson Hole symposium on Friday, 28 August, markets are now pricing in a much higher probability of a September Fed hike. US bond yields rose sharply, which continues to support the dollar while limiting the EUR/USD’s upside. This upside retracement was capped at 1.1621 on 31 August.

2) The ECB Policy Meeting

The ECB is also expected to raise rates in September in direct response to the hike in oil prices following the renewed tensions in the Middle East. Eurozone yields have also risen sharply, which should be ok to ward off a major euro sell-off unless the ECB disappoints and the Fed’s monetary policy expectations are repriced more hawkishly.

3) Geopolitics

Renewed US-Iran military tensions are keeping Brent crude above $90/barrel. This supports defensive positioning into the dollar, even as the risk of imported inflation makes an ECB rate hike more likely. Geopolitics is clouding the EUR/USD outlook, and the next two weeks should provide additional clarity on the situation.

Price Catalysts This Week 1. Non-Farm Payrolls: The major price catalyst this week is the Non-Farm Payrolls report. A weak payrolls report undermines any September Fed-hike expectations. This could strongly support EUR/USD amid ECB rate-hike expectations. However, a better-than-expected US jobs report favors additional dollar strength.

2. Other Macroeconomic Data: Other price catalysts include the US ISM Manufacturing PMI data and the Eurozone Core CPI Flash Estimates YoY (2.5% consensus vs 2.5% prior).

3. Brent crude prices: This is important to establish the level of defensive positioning into the US Dollars, and also the extent to which any ECB rate hike bets are repriced.

EUR/USD Weekly Forecast Scenarios Base case: EUR/USD remains under pressure below 1.1640.

Bull case: Euro gets support from hawkish ECB expectations. Additionally, weak US jobs data → fall in Fed hike expectations → weaker USD → allows EUR/USD to rebound toward 1.17.

Bear case: strong US jobs data + higher oil prices + hawkish Fed → reinforces USD strength. EUR/USD breaks 1.1570 and targets 1.1550.

EUR/USD Technical Outlook Technically, 1.1621 (31 August intraday high) is the next important resistance. Below it, EUR/USD remains vulnerable to 1.1577, followed by the 8 June and 4 August lows at 1.1506. A breakdown of 1.1577 support unlocks the downward path to a retest of the uncapped neckline of the completed double bottom at 1.1506.

On the flip side, a break of 1.1621 clears the pathway to 1.1682. A further move north brings in 1.1743, a potential pitstop before 1.1813 comes into the picture.

EUR/USD holds modest gains on Monday during American trading hours as the US Dollar (USD) struggles to build on Friday’s strength, which followed hawkish remarks from Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole Symposium. At the time of writing, the pair trades around 1.1595, up roughly 0.11% on the day.

The US Dollar rose about 0.55% on Friday and reached its highest level in more than a week after Warsh signalled that the Fed may need to tighten monetary policy further. He stressed that the central bank’s 2% inflation target is “firm” and said policymakers still “have work to do” unless underlying inflation moves toward the target at a sufficient pace.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.55 on Monday after reaching 99.72, its highest level since August 14. US Treasury yields also surged following Warsh’s speech, with the benchmark 10-year yield trading near 4.75% at the time of writing, its highest level since January 2025.

According to the CME FedWatch tool, markets are pricing in around a 61% chance that the Fed will raise interest rates in September, up from 38% before Warsh’s remarks.

On the Euro side, softer-than-expected preliminary German inflation data did little to alter expectations that the European Central Bank (ECB) will raise interest rates next month. Strategists at Brown Brothers Harriman note that Tuesday Eurozone inflation data should underscore lingering price pressures. In their view, “above target inflation and a firmer growth outlook give the ECB scope to normalize the policy rate towards the upper end of its estimated 1.75% to 3.00% neutral range.”

Reflecting this backdrop, BBH highlights that “the swaps curve has virtually fully priced in a 25bps ECB rate hike to 2.50% on September 10 and a total of 60bps of tightening over the next twelve months.”

At the same time, rising energy prices due to tensions in the Middle East are adding to concerns that inflation could stay above the Fed’s and ECB’s 2% targets for longer. This supports expectations of tighter monetary policy on both sides of the Atlantic.

However, the US Dollar is likely to retain the upper hand as hawkish Fed expectations, elevated Treasury yields and geopolitical tensions keep the Greenback supported in the near term. Attention now turns to this week’s US economic data, particularly Friday’s Nonfarm Payrolls (NFP) report, which could shape expectations for the September decision.

Inflation FAQs Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.

EUR/USD kicked off Monday with an attempt to stabilise around 1.1587. Federal Reserve Chair Kevin Warsh returned support to the dollar with a hawkish performance at Jackson Hole. The key test now will be Friday’s US labour market report, which will show whether the case for another rate hike has sufficient backing from the economy. The US dollar has already recovered to a two-week high.

Warsh also stated that with inflation not slowing sufficiently, the regulator may need to tighten policy again. Markets now estimate the probability of a rate hike in September at approximately 57%, up from around 35% before his speech. The yield on two-year US Treasury notes climbed to 4.33%, further enhancing the appeal of dollar-denominated assets.

The main event of the week will be Friday’s August Nonfarm Payrolls report. Expectations point to an increase in employment of around 50,000, following an unexpected decline of 23,000 in July. Unemployment is projected at approximately 4.1%. Strong payrolls, combined with steady wage growth and a stable average working week, would support Warsh’s hawkish stance and may increase pressure on EUR/USD below 1.16. Weak data, on the other hand, would cast doubt on a September rate hike, lower yields, and help the euro recover.

Until Friday, markets will also monitor intermediate signals. US jobs data is due on Tuesday, followed later by private sector employment figures, jobless claims, and revised productivity statistics.

In Europe, eurozone inflation will be the main event, with expectations pointing to an acceleration to around 3.3%. A strong reading would reinforce expectations of an ECB rate hike in September and could partially offset the dollar’s support from the Fed.

Technical Analysis

On the H4 chart of EUR/USD, the market made a downward wave to 1.1567 today. A consolidation range is currently forming above this level, with a potential growth leg to 1.1597 not ruled out. Further decline to 1.1555 is expected. Technically, this scenario is confirmed by the MACD indicator-its signal line is below zero and pointing strictly downwards, reflecting continued bearish momentum with the potential for the downward trend to persist.

On the H1 chart, the market completed the next downward wave to 1.1576. A consolidation range is forming above this level. A growth leg to 1.1597 is expected, followed by the beginning of a decline to 1.1533, with the prospect of the wave continuing to 1.1511. Technically, this scenario is confirmed by the Stochastic oscillator-its signal line is below the 80 level and pointing strictly downwards to 20.

Conclusion EUR/USD has retreated to near two-week lows following Fed Chair Warsh’s hawkish Jackson Hole speech, which significantly raised market expectations for a September rate hike. The probability of a move has surged from 35% to 57%, supported by rising Treasury yields and a stronger dollar. Markets now look to Friday’s US payrolls report as the key test for whether the economy can withstand further tightening, with a strong reading likely to push EUR/USD below 1.16. Meanwhile, eurozone inflation data will be closely watched, with a strong print potentially reinforcing ECB tightening expectations and offering some support to the euro. Technically, the pair remains bearish, with further downside towards 1.1533 and 1.1511 likely in the near term.

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The EUR/USD pair trades in positive territory around 1.1590 during the early European trading hours on Monday. However, the potential upside for the major pair might be limited as traders ramped up bets on a rate hike after hawkish remarks by Federal Reserve (Fed) Chair Kevin Warsh. 

Fed Chairman said on Friday at the Jackson Hole economic symposium that the US central bank will "have work to do" if policymakers don't get the confidence they need that inflation is heading down to 2%.  His hawkish comments have fuelled expectations of a September rate hike, supporting the US Dollar (USD) against the Euro (EUR). 

Traders brace for the preliminary reading of Consumer Price Index (CPI) inflation data from Germany, which will be published later on Monday. Any signs of hotter inflation in Germany could lift the shared currency in the near term. 

Dollar sentiment firms as Fed repricing follows Warsh’s hawkish toneStrategists at Commerzbank highlight that “the main theme on Friday was the hawkish repricing of Fed expectations” in the wake of Fed Chair Kevin Warsh’s Jackson Hole speech. They note that Warsh warned inflation is “not meaningfully slowing” and reaffirmed that the Fed’s 2% inflation target is “firm and fixed,” while stressing that policymakers have “work to do” if they cannot be confident that underlying inflation is returning toward the target.

Warsh flags unfinished inflation fight, keeps Dollar bulls alertFed Chair Warsh delivered a notably more hawkish-leaning tone, with the FXS Speechtracker score at 7.4 versus a 6.5 historical average, underscoring heightened concern about price stability despite solid growth and stable labor markets. The insistence that the Fed must be confident underlying inflation is moving to objective or “we have work to do,” combined with comments that financial conditions are not restrictive and credit markets show few signs of policy restraint, points to a bias toward further tightening or a prolonged restrictive stance even as headline inflation data have improved but underlying trends are judged largely unchanged. Warsh’s emphasis that the Fed’s 2% PCE target is “firm and fixed” and that the predominant focus should be on prices reinforces a message that the inflation battle is not yet convincingly won, a backdrop that tends to support the Dollar on dips.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated 129.70, signaling that the aggregate policy tone remains firmly in hawkish territory despite the July decision to wait. The combination of a high index level and an above-baseline FXS Speechtracker score suggests that markets will continue to price a vigilant Fed stance, with the Dollar likely to stay underpinned as long as inflation progress is viewed as incomplete.

Technical Analysis: EUR/USD is well-supported above the key 100-day SMAIn the daily chart, EUR/USD holds a mildly bullish near-term tone as spot remains above the 100-day simple moving average (SMA), while pressing just under the 20-day Bollinger SMA, which acts as an immediate pivot. The Relative Strength Index (14) at 52.8 sits slightly above its neutral line, hinting that buyers retain a modest advantage without reaching overbought conditions.

On the topside, initial resistance is aligned at the August 26 high of 1.1677. A stronger barrier emerges at the upper Bollinger band around 1.1710, en route to the May 8 high of 1.1788. 

On the downside, the 100-day SMA at 1.1570 offers first support, followed by the August 13 low of 1.1511. A more distant Bollinger lower band level is located near 1.1480, where a deeper pullback would likely encounter firmer buying interest.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index is trading around 99.52 on the 2-hour chart after extending its recovery from the 98.56 low. Price has now risen above the 38.2% Fibonacci level at 99.49 and is currently testing the 23.6% retracement at 99.58. The recovery has been technically constructive, however, DXY is still approaching a heavier resistance zone at 99.58–99.73, where recent highs are located.

The short-term structure remains supported by the rising trendline and fair-value gap at 99.24–99.34. Immediate resistance is located at 99.58, and above that at 99.73, 99.83, and 100.03. On the downside, support is located at 99.49, and below that at 99.41, 99.34, and 99.24.

Looking at the bigger picture, I believe DXY is still in the process of recovering above 99.34–99.41. A break above 99.58 would strengthen the bullish case in the direction of 99.73–100.03, while a break above current resistance would likely result in a sell off back towards the 99.34 support zone.

Key Highlights

EUR/USD struggled near 1.1710 and started a downside correction. It traded below a bullish trend line with support at 1.1655 on the 4-hour chart. Gold prices dipped from $4,700 and tested the $4,420 support. Bitcoin started a consolidation phase below the $80,000 pivot level. EUR/USD Technical Analysis The Euro failed to settle above 1.1700 against the US Dollar. EUR/USD started a downside correction below 1.1680 and 1.1660.

Looking at the 4-hour chart, the pair traded below a bullish trend line with support at 1.1655. There was a clear move below the 50% Fib retracement level of the upward move from the 1.1511 swing low to the 1.1710 high.

The pair even spiked below the 100 simple moving average (red, 4-hour). If there are more losses, the pair might find bids near the 76.4% Fib retracement level at 1.1558.

The first major support could be near 1.1520 and the 200 simple moving average (green, 4-hour). A downside break and close below 1.1520 might start a major leg down. In the stated case, the bears could aim for a move to 1.1440. Any more losses could open the door for a test of 1.1420.

On the upside, EUR/USD could face resistance near the 1.1620 level. The next major resistance might be 1.1660. A close above 1.1660 could start another steady increase. In the stated case, the bulls could aim for a move to 1.1710. Any further gains might open the door for a test of 1.1750.

Looking at Gold, the price accelerated gains above $4,550, but failed to clear $4,700 and corrected some gains.

Upcoming Key Economic Events:

German Consumer Price Index for August 2026 (YoY) (Prelim) – Forecast +2.9%, versus +2.8% previous. German Consumer Price Index for August 2026 (MoM) (Prelim) – Forecast +0.2%, versus +0.8% previous. Chicago Purchasing Manager’s Index for August 2026 – Forecast 57.0, versus 57.6 previous.

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The week in one sentence: speculative positioning shifted more constructively in the week to August 25. CAD short covering led the move, followed by a broad reduction in EUR shorts and renewed Gold buying. GBP and VIX positioning also improved, while JPY positioning deteriorated and WTI flows diverged from weaker prices.

The Canadian Dollar's (CAD) non-commercial net shorts shrank by over 36.5K contracts to about 121.5K contracts, marking the biggest weekly improvement since mid-December. In contrast, USD/CAD traded with respectable losses, with modest CAD rising as positioning improved. Furthermore, the net positioning increased to the 21st percentile.

EUR: Shorts retreat sharplySpeculative net shorts in the Euro (EUR) shrank by around 22.7K contracts to more than 36.3K contracts, the strongest weekly improvement since mid-April. EUR/USD advanced markedly, even surpassing the 1.1700 barrier for the first time since early May, confirming the more constructive flow, although net positioning remains near the 10th percentile of its five-year range.

JPY, AUD and commodities divergeSpeculators added nearly 10.4K contracts to their net short positioning of the Japanese Yen (JPY), even as JPY gathered extra pace and prompted USD/JPY to trade with modest losses. The Australian Dollar (AUD) net shorts widened by just 296 contracts, despite a solid performance from AUD/USD, which finally exceeded the 0.7100 barrier. WTI net longs increased by almost 1.4K contracts amid a decent drop in the price of the barrel. Coffee (KC1) speculative positioning increased marginally by 107 contracts alongside a humble price gain.

GBP and VIX: Confirmation strengthensNet positioning in the British Pound (GBP) improved by just over 10K contracts, while GBP/USD picked up strong upside traction well north of 1.3600 the figure. Speculators trimmed their VIX net shorts by roughly 11.3K contracts, mainly because the reduction of gross shorts more than offset the decline in gross longs; the aka “panic index” traded with a positive footing although meeting resistance around the 16.00 zone, indicating that price and positioning delivered a second confirmation signal.

Gold: Buying acceleratesGold net longs went up by more than 21.1K contracts to just over 243.3K contracts, the biggest weekly rise since June 2. The precious metal navigated with firm gains over the reporting week, confirming the stronger flow and lifting exposure to the 99th percentile of its five-year range.

Positioning Map: Gold reaches an extremeGold exposure sits near the 99th percentile, the clearest crowded long in the report. AUD exposure is also elevated near the 81st percentile. At the other end, EUR net positioning remains near the 10th percentile and WTI near the 13th, despite this week's modest increase in Oil longs.

Dollar Index Price Chart – Source: Tradingview Currently, the U.S. Dollar Index is at $99.02, up slightly from $98.55 on the 2-hour chart. While the rebound gives some short-term momentum to the DXY, it still sits below both the 100-EMA at $99.22 and the 50-EMA at $99.02, with an overall downtrend remaining intact. Until this changes, the structure will continue to be bearish.

RSI also shows the short term rebound and is currently at 55, which shows a recovery from oversold conditions and a move back above the neutral 50 level. There is resistance at $99.13 and $99.27, and even further at $99.38 and $99.71. If buying pressure pushes the price above these, $100.03 and $100.42 will be the next targets. In the event downward pressure remains at $98.99, $98.82, and $98.55, there is still downside.

In my opinion, the DXY is still under pressure unless a break of the $99.38 level is made. A break of this resistance zone could be the catalyst to push to $98.82, $98.55. In the event an upward break is made from the $99.13 – $99.38 resistance zone, it would be very bullish.

GBP/USD Technical Analysis: Pound Consolidates Above $1.3618 With $1.3656 Resistance in Focus