Track market-moving stories before they get noisy

 

EUR/USD breaks long-running downtrend resistance Fed rate hike pricing pares back to 42bp by June 2027 Lower energy prices improve euro area outlook Payrolls, peace negotiations to determine whether breakout has legs EUR/USD has broken higher after spending much of this year trapped beneath downtrend resistance. Whether it sinks or swims will likely be determined by the incoming flow of US economic data and developments in the Gulf.

The stars align... for now One of the key factors that's changed over the past week has been the US rate outlook. While the latest US data has generally continued to point to an economy that's holding up well, markets have become a little less convinced about how much further the Federal Reserve will need to tighten.

Both the ISM manufacturing and services PMIs outperformed expectations, while strength in the new orders components of both surveys points to the US economy continuing to chug along into the second half of the year.

Despite that, markets have pared back the amount of tightening priced by the June Fed meeting next year to around 42 basis points. Correlation analysis suggests EUR/USD has been tracking shifts in front-end US rates closely over the past week, helping to explain some of the move higher.

Source: TradingView

The other factor that's worked in the euro's favour has been the optimism that we'll eventually see some form of lasting peace deal in the Middle East. Whether that eventuates remains highly uncertain, but markets have responded by pushing energy prices lower once again.

That's important because Europe is a major net energy importer. Compared with the United States, which enjoys far greater energy security as the world's largest producer, lower oil and gas prices are a much bigger positive for the euro area economy. They reduce one of the key headwinds that has weighed on the common currency in recent months, easing the need for the ECB to respond aggressively to a supply-driven inflation shock that would otherwise have amplified the downside risks to economic activity.

Another factor that's probably helped the euro has been the intervention episode in Japan. It's highly unusual to see the US Treasury get involved in supporting another currency when we're not talking about a financial crisis or disorderly market conditions.

Why the US decided to get involved remains unclear. Whether it was about the yen, foreign demand for Treasuries, US FX competitiveness, or something else entirely, we simply don't know. What we do know is that it's put the US dollar on the back foot, providing a near-term tailwind for EUR/USD.

Clearly, the positives that have helped the euro not only come across as being very short-term factors, but there's also a lot of uncertainty as to whether they'll stick.

From a directional perspective for the euro, a lot of it will come down to the Gulf and Friday's US payrolls report, which really looms as the key factor given its ability to shift the Fed rate outlook.

EUR/USD breakout shifts focus higher

Source: TradingView

Turning to the charts, we saw a breakout from the minor downtrend that had been in place from the highs set back in the middle of July following last week's Fed meeting. That has since seen the pair extend the move, breaking above resistance at 1.1480 and the 50-day moving average to test the long-running downtrend that's been in place since late January.

After one false break on Monday that saw the pair retrace to the 23.6% Fibonacci retracement of the January to June bear move, we're now seeing a bounce and a close above that downtrend, creating the potential for a run higher.

1.1550 is an important level in the near term, marking where the pair stalled on Monday. If we manage to hold above that level, it opens the door to a test of the 100-day moving average. It has a much more chequered history in terms of influencing price action than the 50- and 200-day moving averages, but a push beyond it would put the 38.2% Fibonacci retracement of the January to June bear move, and more importantly, the 200-day moving average, into focus.

A break above the latter would be significant given the way price has interacted with it in the past, creating the potential for a much larger bullish move.

Of course, if the pair fails to build on the breakout and retraces back beneath the trendline, it would add to the sense that bears remain in the ascendency. That would bring the 23.6% Fibonacci retracement of the January to June bear move, along with the confluence of former resistance at 1.1480 and the 50-day moving average, back into play. A break beneath that zone would point to a much larger unwind towards the July lows.

The oscillators favour the breakout sticking. RSI (14) continues to set higher lows and higher highs while moving further away from the neutral 50 level, but is not yet overbought. That message is confirmed by MACD, which has flipped positive and continues to diverge further away from the signal line, building upside momentum. It's not a screaming buy signal by any stretch, but it does favour buying dips and bullish breakouts rather than trying to play it from the short side in the near term.

Summary:

The EUR/USD forecast is for a potential upside continuation as US Pres Trump says a Hormuz deal could be reached on Wednesday. The EUR/USD is inching higher this Wednesday as the US Dollar retreats following a shift in sentiment, with hopes for positive negotiations between the US and Iran on the geopolitical front gaining momentum. This Wednesday, the greenback is broadly lower as the markets digest the impact of falling US bond yields and softer US labor market indicators. Falling oil prices have also removed the safe-haven appeal of the US Dollar, with investors now willing to assume more market risk.

Furthermore, the US Dollar is also taking a beating after the ADP Non-Farm Employment Change surprised to the downside. US private sector employment as measured by this data set came in at 44K, lower than the market expectation of 68K and the prior of 95K.

The EUR/USD is currently trading 0.1% higher as of writing.

EUR/USD Macro Drivers 1) Retreating Treasury Yields

Today’s biggest macro driver is the decline in US bond yields due to softer US labor market data and reduced dollar appeal from falling oil prices and geopolitical de-escalation. Additional factors include profit-taking from recent dollar longs and rotation away from defensive dollar positioning toward a risk assumption.

2) Easing Geopolitical Fears

The recent pause in new US strikes has provided some relief to the markets on the geopolitical front. Despite the unresolved conflict, any headlines that point to a pause in hostilities are a piece of much-needed good news for a market that is looking drained by the elongated nature of the war. Oil prices are trading below $80 a barrel, suggesting a reduction in the geopolitical risk premium and improved market sentiment.

3) Markets Now Reassessing the Fed Outlook

Last week’s Federal Reserve meeting was interpreted as a hawkish hold. However, the reduction in fuel prices, the lowering of US bond yields, and the underwhelming US labor data released so far are forcing markets to reassess the Fed’s outlook. If the NFP data points to a slowing of US public sector employment and further inflation data suggests moderation, the Fed expectations could start turning dovish.

4) Stable Eurozone Fundamentals

Despite the growth concerns and the impact of rising energy costs on the energy-import-dependent single area, the single currency is benefiting from the ECB’s cautious stance. Furthermore, recent inflation data (Eurozone Core CPI Flash Estimates YoY: actual 2.5%, consensus/prior: 2.4) indicate that inflation has not disappeared totally. These factors are helping to create stability for ECB expectations and are currently supportive of Euro strength.

EUR/USD Near-Term Price Catalysts 1) US Data: Upcoming data from the US that will be on the watchlist of traders include Friday’s Non-Farm Payroll report. Subsequently, the consumer spending and consumer/producer price index data will also hit the newswires. If the data points to lowered US economic resilience, the weakness in the US Dollar could continue.

2) US Treasury Yields: Declining US bond yields will lead to a reduced demand for USD-denominated assets, which invariably supports further gains on the EUR/USD. On the flip side, USD strength is restored if bond yields start rising once more.  

3) Middle East geopolitics: Headlines around the state of shipping or military encounters in the Strait of Hormuz will impact oil prices. If there is a renewal of bombardments, the markets will interpret this as a sign of escalation, and this would revive the USD’s safe-haven appeal at the Euro’s detriment.

EUR/USD Forecast Scenarios Base case: moderate bullishness is expected, with the recent pullback in the USD expected to extend if US bond yields remain pressured. Furthermore, the cooling of geopolitical tensions and stable ECB policy expectations are expected to provide further support for the pair.

Bull case: a combination of weak US data, continued de-escalation on the geopolitical front, and additional declines in US bond yields could see more USD longs being liquidated. Under these conditions, the EUR/USD may reclaim the 1.1670 resistance level or higher.

Bear case: if US bond yields resume the upside trend, coupled with better-than-expected US data and renewed fighting between the US and Iran, this is supportive of a bear case scenario. This scenario sees a further widening in the interest yield differential between the Euro and US Dollar, and a retreat in Fed rate cut expectations.  A retreat towards support levels below 1.14 is the price expectation here.

EUR/USD: Technical Outlook The break of the neckline at 1.1480 confirms the bottoming pattern (progressing rising lows at 1.1324 and 1.1363). This unlocks the door for a measured move that is expected to complete at 1.1577, the prior low of 19 January 2026 and the lower edge of the resistance zone, with 1.1581 as the upper edge. Only when this zone is breached can the 1.1671 resistance (30 April 2026 low and neckline of the 16 April and 12 May 2026 double top) become available as a new upside target.

Fig 1: EUR/USD daily chart showing key price levels (snapshot taken on 5 August 2026) On the flip side, this upside move is only invalidated if the bottoming price levels are degraded, which leaves room for continuation of the recent near-term downtrend towards 1.1269, the high of 17 July 2023. A further downside target at 1.1210 (23 September 2024 high) becomes the next downside target if 1.1269 is breached.

The currency markets have no major announcements to focus on today, so ranges are likely to be watched by most.

EUR/USD Technical Analysis

EURUSD trades around 1.15462, extending its climb to fresh highs above both the 50-period and 200-period EMAs. Source: TradingView. The euro looks like it is testing the 1.1560 level, an area that had been important previously on a swing high, so we’ll have to see if we can break above there. It certainly looks like it’s struggling, but I also recognize that recently the 1.15 level had been support. Typically speaking, this is a pretty choppy pair, and when we zoom out on the longer-term charts, we start to see that we are approaching an area that historically has seen a lot of chop and noise. So a little bit of a pullback here would not be surprising to me at all. Certainly, we are seeing interest rates in America try to turn back around to the upside during the early part of the session, so something worth keeping an eye on.

USD/CHF Technical Analysis USDCHF trades around 0.80930, holding below the 0.81000 level and both its 50-period and 200-period EMAs. Source: TradingView. Currently, the US dollar and the Swiss franc seem to be very consolidated, and this is typical for this pair. But the interest rate differential most certainly favors the US dollar, and carry traders will be attracted to the wide spread here that they collect at any close of the day, especially with a lot of traders on Wednesday getting triple swap. Looks like the area right around 0.81 continues to be a magnet for price.

GBP/USD Technical Analysis

GBPUSD trades around 1.34708, pushing back toward its recent high above both the 50-period and 200-period EMAs. Source: TradingView. And finally, the British pound is stretching towards the 1.35 level. This is a lot like the euro in the sense that we had reached close to a swing high and failed a bit. Rates in the United States climbing a little bit early may provide a little bit of a headwind as well. 1.35 being broken would obviously be a strong headline because of the large round psychological number. It could bring in more buyers; we’d have to wait and see.

Currently, the 1.3435 level or so looks to be support. Could be range-bound. Today has no major economic announcements of any serious consequence. And with that, it would make sense if traders were a little bit range-bound and indecisive.

If you’d like to know more about how to trade forex, please visit our educational area.

HomeTechnical AnalysisEUR/USD –05.08.2026

The Euro took advantage on the Intervention with the Yen to test the downtrend as we see from the chart, which in return pushed for a correction

A trading zone between 1.1435 and 1.1560 could hold prices until one of the boundaries break.

Above 1.1560 could open the door towards 1.1685 and 1.1795.

Below 1.1435 more of a drop  toward 1.1320 and 1.1210 is likely.

SUPPORT RESISTANCE LEVEL1 1.435-80 1.1560 LEVEL2 1.1320 1.1685 LEVEL3 1.1210 1.1795 Head of Technical Analysis at Orbex, Rami Abu Draa
holds a bachelor's degree in Banking, Finance and Economics. A professional trader and mentor with over 10 years of industry experience, Rami is passionate about sharing his knowledge with Orbex clients from basic to advanced concepts of Technical Analysis, Investment psychology and Investment/Trading methodologies. He is able to combine fundamental and technical principles to deliver a unique perspective on the markets that enables Orbex traders to identify high-probability trading opportunities.

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlights that EUR/USD firmed to 1.1529, with short‑term momentum turning slightly higher. They see scope for the Euro to edge up but doubt an intraday break of 1.1565, with 1.1545 as nearer resistance and 1.1515/1.1500 as supports. On a 1–3 week horizon, a close above 1.1565 could open 1.1600, while 1.1470 remains strong support.

Upside bias constrained by resistance"24-HOUR VIEW: When EUR was at 1.1510 in the early Asian trade yesterday, we indicated that “the current price movements appear to be part of a consolidation phase between 1.1485 and 1.1540.” EUR then traded within a narrow range of 1.1501/1.1534 before settling at 1.1529 (+0.19%). There has been a slight uptick in upward momentum, and EUR may edge higher today. Given the mild upward momentum, any advance is unlikely to reach the major resistance at 1.1565. Note that there is another resistance level at 1.1545. Support is at 1.1515; a breach of 1.1500 would mean that the current mild upward pressure has faded."

"1-3 WEEKS VIEW: EUR rose sharply and closed higher by 1.41% last week. On Monday (03 Aug, spot at 1.1530), we indicated the following: “The rapid rise appears to be running ahead of itself, but there is a chance for EUR to test the significant resistance at 1.1565. Should EUR close above this level, it could rise toward 1.1600.” Our view remains unchanged. Overall, only a breach of 1.1470 (‘strong support’ level previously at 1.1455) would indicate that EUR is unlikely to test 1.1565."

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

US Dollar Talking Points: The carry trade in USD/JPY has been building for more than five years now and the Japanese Yen weakness that’s seen the pair rise by more than 50% over that time is a large point of imbalance across global foreign exchange markets. The Bank of Japan has no dire need for near-term rate hikes, as Japanese inflation is currently at 1.6-1.7%. They also have an inflation target of 2% but unlike the US, inflation is currently subdued below that waypoint. Nonetheless, US Treasury Secretary Scott Bessent hinted that Japanese officials should look to tighter policy following the posture around interventions last week after the FOMC and BoJ rate decisions.

It’s truly a conundrum for the Bank of Japan. On one hand, they’d probably prefer it if the Japanese Yen didn’t weaken dramatically against global currencies, like the US Dollar. But on the other, there’s no pressing demand for a rate hike as their inflation levels remain below the bank’s 2% target.

Allowing the currency to fall rapidly runs the risk of bringing on unsavory levels of inflation, which would require rate hikes and, in-turn, a threat to Japanese growth. And for a country with an aging and declining population who spent decades struggling with deflation and disinflation, risking that growth is a pretty unsavory concept particularly when there’s not a massive current demand for such.

On the part of the United States, however, there’s a couple of reasons that they would want to see some form of action. The USD/JPY spot rate sits near recently-established 40-year highs. As the second largest component of the DXY basket, the significant JPY weakness of the past five years has kept the value of DXY elevated, which makes trade a more difficult venture for the United States as exported products are more expensive and imports are relatively cheaper.

But perhaps the biggest risk – is that if Japanese policymakers wanted to continue to try to have their cake and eat it too, by using interventions to run stops on market participants while trying to draw some artificial line in the sand, without hiking rates to address the fundamental divergence between the two economies rate policies – that would probably entail Japan selling US Treasuries. And that would mean even higher US Treasury yields, and we’ve already seen the 30-year bond push up to a fresh 19-year high.

So this is really a story wrapped in intrigue and it can have repercussions far and wide depending on how aggressively it spins out of control.

That global carry trade is, in essence, a form of leverage. We saw what happens when just some of that leverage gets taken out back in July of 2024, when the BoJ intervened on the morning of a US CPI print and despite markets finally getting the confirmation they needed that rate cuts were on the way, the Nasdaq 100 put in a bearish engulf and then sold off with aggression over the next few weeks.

The reason was some of that leverage brought upon by the carry trade was taken out as USD/JPY unwound, and that hit levered markets like high flying AI tech stocks until calm started to return on the morning of August 5th.

We’re not at that point yet, but if Scott Bessent has his way the situation could produce unwelcome and unexpected repercussions fairly soon.

Where this matters for the US Dollar – it’s been obvious for some time that the current administration would like a weaker USD. Trump has said as much, extolling the benefit of a weak currency for exporting goods while making domestic goods more competitive on a cost basis. Those efforts have largely fallen flat over the past year-and-change as the USD is roughly flat since last April, and a big reason why is the run in USD/JPY which extended after last year’s election of Sanae Takaichi, thereby putting both central banks in a precarious spot.

For now, it’s difficult to get too excited about USD/JPY above 160.00 as that’s the type of level that may evoke another intervention or a threat of such. Meanwhile, the fundamental bias remains tilted to the long side of the pair and thusly, for the US Dollar as a whole, there’s a lean towards trend strategies for short-term strength and breakout strategies for broader weakness.

US Dollar Four-Hour Chart Chart prepared by James Stanley; data derived from Tradingview USD/JPY

Last week was one of the largest red bars in USD/JPY since that July 2024 episode, and already for this week it looks like bulls are starting to make a return. It’s still too early to say that the dust has settled but it also highlights what I was talking about in the weekend video, where interventions at or around that 155.00 level seem to make little sense. Thus, we’ve seen buyers return to bid the dip but what remains to be seen is whether there is another swing of intervention above 158 or perhaps upon a test of the 160.00 handle.

USD/JPY Weekly Price Chart Chart prepared by James Stanley; data derived from Tradingview EUR/USD Despite the Euro being a 57.6% allocation of the DXY basket it really does feel like the larger currency pair is along for the ride.

This makes sense if we consider that USD/JPY is up more than 50% over the past five years – and given that the only thing that can actually push price in a real market is demand it highlights that there’s still an imbalance of longs v/s shorts. And when that comes into question, even just a little bit, that USD-selling could happen across currency pairs and not just against the Japanese Yen.

I talked about this in last week’s webinar and I reiterated it this week. At this point it’s the 1.1500 level in EUR/USD that’s held the lows now for two consecutive days and there’s bullish structure in place down to the Friday swing low of 1.1455.

EUR/USD Daily Chart Chart prepared by James Stanley; data derived from Tradingview GBP/USD Cable built in a similar falling wedge into the Fed last week, and the response there was perhaps even more emphatic as buyers pounced on the bullish reversal. The challenge now for the pair is that 1.3500 level but there’s higher-low support potential around 1.3390 for bullish continuation scenarios.

GBP/USD Four-Hour Chart Chart prepared by James Stanley; data derived from Tradingview USD/CAD USD/CAD looks somewhat calm on a relative basis, following last week’s test and hold a the 1.4000 level. Following that test on Thursday, we’ve had higher lows, illustrating an element of bullish anticipation as buyers have stepped in with a bit more aggression over the past couple of days. This keeps the door open for short-term strength and for those looking for USD-strength, this may be a less chaotic backdrop than what showed in USD/JPY and perhaps a bit cleaner than EUR/USD or perhaps even GBP/USD which are vying for possible bullish trend scenarios.

USD/CAD Daily Chart Chart prepared by James Stanley; data derived from Tradingview --- written by James Stanley, Senior Market Analyst, Global Macro

Scotiabank’s analysts observe that the Euro is consolidating around the 1.15 area against the Dollar, with limited Eurozone data to drive price action. They point to last week’s sharp move higher stalling at a broader bear-trend line and stress that a break above 1.1565 is needed to extend gains, while support is seen in the 1.1460/1.1480 region.

Euro holds gains near 1.15"The EUR is little changed on the session. There were no major data reports from the Eurozone area on the session and spot appears to be content to consolidate recent gains through the 1.15 area."

"Reports suggest some net inflows into Eurozone bonds as global investors reduce exposure to US Treasury debt"

"Neutral—The snap higher in EUR/USD last week stalled at a key technical point—the broader bear trend that has guided the EUR lower from the January peak."

"Technical pointers lean EUR-bullish after a solid rise overall last week but a break above 1.1565 trend resistance is needed to lift the EUR further. Support is 1.1460/80."

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

EURUSD remains constructive and holding above 1.1500 mark (round-figure / broken upper bull-channel boundary) for the fourth consecutive day, despite Monday’s pullback from new highest since June 17 that warned of potential stall of the latest recovery rally from 1.1353 to 1.1559.

Bulls were so far unable to register a clear break above Fibo barrier at 1.1524 (38.2% of 1.1849/1.1324 descend) and additionally capped by falling trendline off 1.1849 (currently at 1.1533), but the following action found footstep at 1.1500 (guarding another significant support at 1.1465, provided by daily cloud base), keeping near term bias with bulls, despite fading bullish momentum and overbought stochastic on daily chart.

Weaker dollar contributes to Euro’s positively aligned near term outlook, though sustained break of 1.1524/33 pivots remain required to validate scenario and signal bullish continuation and unmask next barriers at 1.1567 (100DMA); 1.1586 (daily cloud top) and 1.1627 (200DMA) in extension.

Res: 1.1540; 1.1567; 1.1586; 1.1627
Sup: 1.1500; 1.1465; 1.1448; 1.1433

Windsor Brokers Ltdhttp://www.windsorbrokers.com/

The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.

Orbex Group Limited is the holding company of Orbex Global Limited, Orbex Limited is an affiliate with Orbex Global Limited. Orbex Global Limited is authorized and regulated by Mauritius Financial Services Commission “FSC” (View License). Orbex.com is owned by Orbex Group Limited and is operated by Orbex Global Limited with registered address: Ground Floor, The Catalyst, Silicon Avenue, 40 Cybercity, 72201 Ebène, Republic of Mauritius

Risk Warning: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. There is a possibility that you may sustain a loss of some or all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Orbex Global does not offer its services to residents of certain jurisdictions such as Mauritius, USA, and North Korea.

Dollar Index Price Chart – Source: Tradingview The US Dollar Index (DXY) is trading at 100.05. After last week’s steep drop, this confirms efforts to reestablish a trading range. From the daily chart, the DXY has found support from a long-term ascending trendline that has guided price action since February. DXY buyers have defended the 99.48 horizontal support and prevented price action from weakening even further.

Current price action balances the 100 day EMA at 99.93 with the 50 day EMA at 100.44. A sustained upside break from the current trading range at 100.45 supports a bullish trend and targets 101.61, subsequently 102.66. Outside of the 50 day EMA, price action has not confirmed the trend resurgence. The support of the trendline would guide price action to defend 99.48 and subsequently 98.53.

Momentum indicators have yet to confirm the strength of the bullish trend. The RSI has recovered from oversold levels, but remains below the neutral 50 level confirming the bullish reversal has not yet been confirmed. The strength of the bullish trend will be confirmed with a daily close above 100.45. Until then major resistance levels reside around 100.45 to support 101.61, 102.66, and 99.48 to 98.53.

Current bias remains neutral, but is leaning bullish as long as price action holds above 99.48. Confirmation of the bullish trend will be confirmed with a move above.

I am already riding a EURUSD sell entry. I posted the sell July 30 2026 on social media @AidanFX : “EURUSD Sold at 1.1531 Stop Loss at 1.1616 Target at 1.1361” and expecting a move lower.

EURUSD Daily Chart July 30 2026

A trader should always have multiple strategies all lined up before entering a trade. Never trade off one simple strategy. When multiple strategies all line up it allows a trader to see a clearer trade setup. We at EWF never say we are always right. No market service provider can forecast markets with 100% accuracy. Only thing we at EWF 100%, is that we are RIGHT more than we are WRONG.

Of course, like any strategy/technique, there will be times when the strategy/technique fails so proper money/risk management should always be used on every trade.  Hope you enjoyed this article and follow me on social media for updates and questions> @AidanFX

At Elliottwave-Forecast we cover 78 instruments (Forex, Commodities, Indices, Cryptos, Stocks and ETFs) in 4 different time frames and we offer 5 Live Session Webinars everyday. We do Daily Technical Videos, Elliott Wave Trade Setup Videos  and we have a 24 Hour Chat Room. Our clients are always in the loop for the next market move.

Elliott Wave Forecasthttps://elliottwave-forecast.com

ElliottWave-Forecast has built its reputation on accurate technical analysis and a winning attitude. By successfully incorporating the Elliott Wave Theory with Market Correlation, Cycles, Proprietary Pivot System, we provide precise forecasts with up-to-date analysis for 52 instruments including Forex majors & crosses, Commodities and a number of Equity Indices from around the World. Our clients also have immediate access to our proprietary Actionable Trade Setups, Market Overview, 1 Hour, 4 Hour, Daily & Weekly Wave Counts. Weekend Webinar, Live Screen Sharing Sessions, Daily Technical Videos, Elliott Wave Setup videos, Educational Resources, and 24 Hour chat room where they are provided live updates and given answers to their questions.

EUR/USD remains subdued for the third successive day, trading around 1.1500 during the Asian hours on Tuesday. The pair continues to hold losses as the US Dollar (USD) finds support from ongoing uncertainty in the Middle East, despite lingering hopes for a diplomatic breakthrough between the United States (US) and Iran. Any signs of escalating tensions between the two nations could drive crude oil prices higher, potentially prompting the Federal Reserve (Fed) to hold interest rates at elevated levels for longer.

Diplomatic signals remain tense over the critical waterway. US President Donald Trump announced that his latest offer of talks is a "last chance" for Iran, following his decision to call off a major attack on the Islamic Republic. Trump expressed expectations that negotiations would begin shortly to reopen the Strait of Hormuz and address US concerns regarding Iran's nuclear program.

However, General Mohsen Rezaei, advisor to Iran's Supreme Leader, firmly rejected these conditions, stating that Iran will absolutely not permit a second corridor in the Strait and warning that any foreign warships or military forces deployed for that purpose will be targeted.

On the monetary policy front, Fed Chair Kevin Warsh is reportedly weighing changes to the central bank's operations. Reports indicate Warsh has floated a proposal to hold six rate-setting meetings per year, supplemented by two additional meetings focused on broader economic policy.

Market participants are now turning their attention to Friday's US July jobs report for further guidance on the path of US interest rates. Nonfarm Payrolls are projected to increase by 83,000—up from 57,000 previously—while the Unemployment Rate is expected to rise slightly to 4.3% from 4.2% in June.

Meanwhile, the Euro could see support from improving risk sentiment following a sharp decline in crude oil prices, which fell on hopes of an eventual US-Iran agreement to reopen the Strait of Hormuz and ease regional conflict fears. While the drop in oil prices led money markets to modestly scale back expectations for further European Central Bank tightening, a rate hike by September remains largely priced in.

Euro CTA positioning mapped across big downtape to flat tape scenariosAccording to TD Securities, their CTA Tracker provides a detailed “CTA positioning est., EUR” across a range of market environments, explicitly covering “big downtape CTA positioning est., EUR, downtape CTA positioning est., EUR, flat tape.” The framework allows systematic Euro futures exposure to be assessed consistently as the tape shifts from more pronounced downside conditions through to neutral trading ranges.

Key Points:EUR/USD pulled back as Germany's Retail Sales missed analyst estimates. USD/CAD gained ground amid falling demand for commodity-related currencies. USD/JPY moved away from session lows as traders reacted to recent interventions.

U.S. Dollar Moves Higher As Traders React To ISM Manufacturing PMI Report

DXY 030826 4h Chart U.S. Dollar Index gains ground as traders focus on the better-than-expected ISM Manufacturing PMI report. The report indicated that ISM Manufacturing PMI increased from 53.3 in June to 55.6 in July, compared to analyst forecast of 54. ISM Manufacturing Employment grew from 49.7 to 52.8, compared to analyst consensus of 49.8. Numbers above 50 show expansion.

Currently, U.S. Dollar Index is trying to settle above the resistance level at 99.85 – 100.00. In case this attempt is successful, U.S. Dollar Index will move towards the next resistance level, which is located in the 100.50 – 100.65 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

EUR/USD Pulls Back As Germany’s Retail Sales Miss Estimates

EUR/USD 030826 4h Chart EUR/USD is losing ground as traders react to the disappointing Retail Sales report from Germany. The report showed that Retail Sales decreased by -1.1% month-over-month in June, compared to analyst forecast of -0.5%.

From the technical point of view, EUR/USD made an attempt to settle above the resistance level at 1.1510 – 1.1525 but failed to develop sufficient upside momentum and pulled back towards the 1.1500 level. In case EUR/USD manages to settle below 1.1500, it will head towards the next support, which is located in the 1.1420 – 1.1435 range.

GBP/USD Moves Lower Amid Profit-Taking GBP/USD 030826 4h Chart GBP/USD pulls back as traders take some profits off the table after the strong rally and react to ISM Manufacturing PMI report from the U.S.

A move below the 1.3400 level will open the way to the test of the support level at 1.3335 – 1.3350. On the upside, GBP/USD needs to settle above the resistance level at 1.3465 – 1.3480 to have a chance to gain upside momentum in the near term. If GBP/USD climbs above 1.3480, it will head towards the resistance level at 1.3550 – 1.3565.

USD/CAD 030826 4h Chart USD/CAD is moving higher as traders focus on the pullback in precious metals markets. Other commodity-related currencies are also losing ground in today’s trading session.

USD/CAD climbed above the support level at 1.4010 – 1.4025 and is trying to settle above the 1.4050 level. In case this attempt is successful, USD/CAD will move towards the 50 MA at 1.4070. If USD/CAD manages to settle above the 50 MA, it will head towards the resistance level at 1.4125 – 1.4140.

USD/JPY Moves Away From Session Lows

USD/JPY 030826 4h Chart USD/JPY attempts to rebound after interventions from Japan and U.S. It is not clear how mcuh U.S. spent to provide support to the yen, but Treasury Secretary Scott Bessent said that the country would not hesitate to get back into the market.

U.S. officials decided to intervene as Japan could be forced to sell U.S. Treasuries to raise money for currency interventions. The yield of 30-year Treasuries is at multi-decade highs, and additional pressure from Japan’s sales could trigger a major sell-off in U.S. bond markets.

If USD/JPY climbs above the 157.00 level, it will move towards the resistance level at 157.50 – 158.00. A successful test of this level will open the way to the test of the next resistance at 159.50 – 160.00.

If you’d like to know more about how to trade forex, please visit our educational area.

Related Articles

USD/JPY, USD/CAD and USD/CHF Forecasts – Joint Intervention Tests 155 Support in USD/JPYUS Dollar Price Forecast: NFP Week Puts DXY, EUR/USD and GBP/USD in FocusInterest Rate Forecast: BOJ Eyes September Hike as Yen Intervention Pressures USDJPYAbout the Author

Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.

Editors’ Picks

Following the strong recovery of the euro against the US dollar last week, slight indecision has reemerged on the EUR/USD chart. This is reflected in early week trading fluctuations, which now show a price decline of around -0.2%, indicating modest short-term strength for the dollar. For now, this shift is paving the way for a neutral scenario following the recent bullish pressure. This pause may be tied to the lingering threat of higher interest rates in the United States and a potential rebound for the greenback after its recent depreciation. If these factors persist, consolidation could become the dominant theme in the coming sessions.

Is the FED Still Relevant? Last week was crucial for the US monetary policy outlook. The Federal Reserve announcement featured comments that remain focused on the central bank's 2.00% inflation target, an objective yet to be achieved and heavily emphasized during the meeting. However, statements from FED Chair Kevin Warsh failed to confirm an overly aggressive stance for the coming months. Markets, anticipating more decisive signals, triggered a pronounced drop in dollar demand during those sessions.

The context now looks slightly different following the central bank announcements. A couple of sessions ago, the core PCE Price Index for June was released. This is the official inflation gauge tracking price changes for consumed goods and services while excluding volatile items like food and energy. The June data showed the index settling around 3.3%. Although slightly below the year's peak of 3.4%, it has yet to show a significant enough decline to establish a clear downward trend in overall inflation. To some extent, this highlights lingering inflationary pressures still embedded in the economy.

Source: TradingEconomics

This data release likely played a key role in shaping expectations for the Federal Reserve September decision. A week ago, the probability according to CMEGROUP of a potential rate hike on September 16 to a new benchmark zone of 4.00% in the United States stood at around 55%. Today, following the inflation data, that probability has climbed to nearly 62%. This underscores that the market may still be pricing in a possible rate increase due to persistent inflationary pressures expected to linger in the US economy over the coming months.

Source: CMEGROUP

Taking all this into account, the prospect of the US central bank potentially raising interest rates in September could be helping the US dollar hold its ground in the short term. This is particularly noticeable after last week's loss of momentum, which allowed the euro to steadily regain ground. If the probability matrix for the FED continues to highlight a potential rate hike next month, dollar-denominated investments will likely remain attractive. This is because the US interest rate remains higher than Europe's, making it harder for the euro to resume its recovery easily and reinforcing a more solid phase of consolidation in the EUR/USD.

EUR/USD Technical Outlook

Source: StoneX, Tradingview

Long-term trendline holds firm: For several months, average fluctuations in the EUR/USD have been defined by a long-term bearish trendline, which remains the most critical technical structure to watch. Despite the recent price recovery, buying pressure has not been strong enough to break through this line in the short term. Until a more robust bullish momentum emerges, this pattern will remain the primary technical driver for upcoming sessions.
  RSI: Currently, the RSI is consistently fluctuating above the 50 level, indicating that bullish momentum has dominated over the last 14 sessions. However, the indicator's curve has started to flatten. Over time, this could signal fading buying momentum, pointing to increased market indecision in the near term.
  TRIX: The TRIX also remains below the neutral 0 line, confirming that bearish pressure in the exponential moving averages is still relevant. If it fails to cross the neutral threshold, the broader chart will likely remain weighed down by the bearish bias that has dominated recent months.
  Key Levels:

1.16033 (Key Resistance): This previous high acts as the most important bullish barrier above the long-term bearish trendline dominating the chart. A sustained price move and close above this level could trigger a breakout of the current technical structure, opening the door for a new short-term bullish trendline to take shape.
  1.14801 (Nearby Barrier): This level corresponds to a significant retracement zone and coincides with the 50-period simple moving average. Failure of the price to consistently move away from this area could highlight ongoing indecision, potentially leading to the formation of a prolonged sideways channel.
  1.14300 (Ultimate Support): This level aligns with a retracement zone from previous weeks and stands as the most crucial psychological support. A drop back below this threshold could revive a dormant bearish bias and reinforce the extension of the long-term bearish trendline as the dominant structure.
  Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25

EUR/USD begins the week around 1.1540. Following a volatile week, market attention has shifted from the Federal Reserve meeting to US economic data. Investors will assess whether incoming figures reinforce the case for a September rate hike or, conversely, point to a cooling of the US economy.

Monday brings business activity indices from China and the US. The US ISM Manufacturing PMI is expected at approximately 53.0, down from 53.3 previously. Holding firmly above 50 would support the dollar, while a more pronounced slowdown would raise doubts about economic resilience and provide support for EUR/USD. On Tuesday, attention turns to JOLTS job openings, with forecasts pointing to a decline to 7.3 million from 7.594 million.

Wednesday’s highlight is the ISM Services PMI, expected to rise to 55 from 54. A strong reading would support the dollar, as services remain a key component of the US economy and an important source of inflationary pressure. Thursday’s calendar is relatively quiet, leaving the pair to consolidate ahead of Friday’s key releases.

On Friday, Germany will release foreign trade data, with the surplus expected to narrow to €11.2 billion from €19.1 billion. The main event, however, will be the US labour market report. Non-farm payrolls are forecast to rise by 79,000, up from 57,000, while unemployment is expected to hold steady at 4.2%. A stronger reading would reinforce expectations of a Fed rate hike and weigh on EUR/USD, while weak job growth or rising unemployment would support the euro.

Technical Analysis

On the H4 chart of EUR/USD, the market has formed a consolidation range around the 1.1533 level, currently extending between 1.1524 and 1.1538. This range is nearing completion. An upside breakout would suggest a corrective move towards 1.1556, followed by a decline to 1.1480. A direct downside breakout would open the way for a move to 1.1400. The MACD indicator supports this scenario, with its signal line above zero but pointing downwards, reflecting weakening upward momentum.

On the H1 chart, the market has completed an upward move to the 1.1556 level. A consolidation range is currently forming below this level. Today, a move lower towards 1.1480 is expected, followed by a move higher to 1.1518, and then a continuation of the downward move to 1.1400, with scope for the trend to extend to 1.1330. The Stochastic oscillator confirms this scenario, with its signal line below 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.

Conclusion EUR/USD begins a data-heavy week with markets focused on US economic indicators following the Fed’s policy decision. The ISM manufacturing and services PMIs, JOLTS job openings, and Friday’s labour market report will be crucial in shaping expectations for a potential September rate hike. A strong set of data would support the dollar, while weaker readings could support the euro. Technically, the pair appears to be consolidating around 1.1533, with a potential corrective move towards 1.1556 before resuming its broader bearish trajectory towards 1.1400 and possibly 1.1330. The week’s data releases will be the key catalysts for direction.

Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

RoboForex Ltdhttps://www.roboforex.com/

RoboForex Ltd is a reputable financial brokerage company that has been operating since 2009. It provides reliable access to the largest financial markets with competitive conditions.

Dollar Index Price Chart – Source: Tradingview Currently, the U.S. Dollar Index sits around 99.79, approaching significant support due to the long-term ascending trendline intersecting with the 100-day EMA (99.92). After buying pressure was absorbed around 101.61, the Index was pressed to the psychological 100.00, but the broader uptrend is still in effect.

Now the 100-day EMA at 100.45 is the first point of resistance, and the RSI indicates a bearish trend may be losing momentum due to the recent fall to 34. A daily close at 99.47 or lower would negate the uptrend, with a target at 98.53, then 97.63. If prices hold above the trendline, expect a move to 100.45, with the 101.61 target remaining in effect.

While the trend remains bullish, and prices are above the trendline, the next few daily candles will dictate whether the trend remains bullish, or a deeper correction is in effect.

GBP/USD Technical Analysis: GBP Approaches Important Resistance Level at 1.3500

Summary:

EUR/USD climbed to its highest level in more than six weeks after breaking above 1.1500. Softer expectations for further Federal Reserve tightening continued to pressure the US dollar. Traders now await ISM manufacturing data before shifting attention to Friday's US payrolls report. The euro began the week on a stronger footing, extending last week’s rally as broad-based weakness in the US dollar continued to support the common currency. EUR/USD climbed above 1.1500, reaching its highest level since mid-June after investors scaled back expectations that the Federal Reserve will need to resume raising interest rates this year.

Last week’s Fed meeting marked a turning point for the dollar. Although policymakers left interest rates unchanged, markets were unconvinced that officials are prepared to deliver another hike unless inflation accelerates significantly. Treasury yields retreated after the meeting, dragging the greenback lower across major currency pairs and allowing the euro to recover sharply from July’s lows.

At the same time, geopolitical concerns eased after reports that the United States postponed further military action against Iran. The decline in oil prices that followed helped reduce immediate inflation concerns, removing one of the main factors that had recently supported the US dollar.

US economic data now becomes the next catalyst for EUR/USD With the Federal Reserve now temporarily out of the spotlight, investors are turning their attention to incoming economic data for fresh clues on the direction of US monetary policy.

Monday’s ISM Manufacturing PMI will offer an early indication of how the US industrial sector performed in July after recent signs that business activity has begun to stabilize. Markets will also monitor the S&P Global Manufacturing PMI for confirmation of broader economic momentum.

However, attention is already shifting toward Friday’s Nonfarm Payrolls report, widely regarded as the week’s most important release. A resilient labour market could revive expectations for tighter monetary policy later this year, while weaker employment growth would strengthen the view that the Fed has reached the end of its tightening cycle.

That makes this week’s data particularly important for EUR/USD after last week’s breakout.

Euro buyers regain technical control The technical picture has improved considerably over the past several sessions.

After establishing support around 1.1350, EUR/USD has produced a strong impulsive recovery, breaking through the psychological 1.1500 level while also clearing the descending trendline that had capped prices since June.

The rally has been accompanied by a move back above both the 100-day and 200-day moving averages, reinforcing the argument that medium-term bullish momentum is returning. Price is now consolidating just below 1.1560, suggesting buyers are pausing after a rapid advance rather than showing signs of exhaustion.

A sustained move above 1.1558 would expose the June high near 1.1620, while a successful break there could encourage a broader recovery toward 1.1650.

Bullish Outlook The outlook remains positive while EUR/USD holds above 1.1480. Continued weakness in the US dollar and softer Treasury yields could allow buyers to challenge 1.1558, with 1.1620 becoming the next major upside objective.

Bearish Outlook Failure to hold above 1.1480 would increase the risk of profit-taking after last week’s rally. A decisive break below 1.1430 could expose 1.1350, signalling that the recent recovery was only corrective rather than the beginning of a broader trend reversal.

On the downside, the first layer of support sits near 1.1480, followed by 1.1455, which represents the midpoint of the latest advance. A move below 1.1430 would weaken the current bullish structure and suggest that sellers are regaining control.

EUR/USD Outlook The near-term outlook for EUR/USD remains constructive after last week’s decisive break above the 1.1500 psychological level shifted momentum back in favour of buyers. However, the pair is entering a data-heavy week that could determine whether the rally has enough strength to extend toward the June highs. Traders will closely monitor the US ISM Manufacturing PMI and Friday’s Nonfarm Payrolls report for fresh clues on the Federal Reserve’s policy path. Softer-than-expected US data could reinforce dollar weakness and lift EUR/USD toward 1.1620, while stronger economic readings may trigger a pullback as investors revive expectations of tighter US monetary policy. For now, the broader bias remains bullish as long as the pair holds above key support around 1.1480.

United Overseas Bank’s (UOB) Quek Ser Leang observes EUR/USD rebounded sharply after a dip to 1.1453, with scope to extend gains toward 1.1565 intraday, provided it holds above 1.1495. On a 1–3 week view, he sees potential for a test of 1.1565 and possibly 1.1600, while a break below 1.1455 would undermine the bullish scenario.

Upside bias toward 1.1565–1.1600"24-HOUR VIEW: Last Friday, USD fell to a low of 1.1453 and then rebounded sharply to close unchanged at 1.1527. EUR could continue to rebound today but note that 1.1565 is expected to provide significant resistance. To keep the momentum going, EUR must hold above 1.1495, with minor support at 1.1510."

"1-3 WEEKS VIEW: After dropping to a low of 1.1353 early last week, EUR soared and ended the week 1.41% higher at 1.1527. The rapid rise appears to be running ahead of itself, but there is a chance for EUR to test the significant resistance at 1.1565. Should EUR close above this level, it could rise toward 1.1600. On the downside, a breach of 1.1455 (‘strong support’ level) would indicate that EUR is unlikely to break above 1.1565."

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

The EUR/USD pair trades in positive territory near 1.1535 during the early European trading hours on Monday, bolstered by improved risk sentiment. The Euro (EUR) edges higher against the US Dollar (USD) after reports that US President Donald Trump had called off an attack on Iran and talks between the two sides would happen on Monday. Traders will closely monitor the developments surrounding US-Iran negotiations. 

Traders brace for the German Retail Sales data for June, which is due later on Monday. If the reports come in weaker than expected, this could drag the shared currency lower. On the US docket, the US ISM Manufacturing Purchasing Managers Index (PMI) data will be published. 

In the daily chart, EUR/USD trades at 1.1533. The pair remains capped in the near term as spot holds below the 100-day simple moving average (SMA) at 1.1569, keeping the broader tone heavy despite the latest bounce. The Relative Strength Index (14) at 62.5 shows firm positive momentum, but with price still under the key trend average, this strength merely hints at a corrective rebound within a broader bearish backdrop.

On the downside, immediate support is aligned with the upper Bollinger Band at 1.1529, with the 20-day SMA middle band at 1.1430 and the lower band near 1.1331 marking deeper cushions if selling resumes. On the topside, a daily close above the 100-day SMA at 1.1569 would be needed to ease bearish pressure and open the way for a more sustained recovery toward higher levels.

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

Analysts at Scotiabank note that the Euro received “a modest lift” earlier in the session after French CPI data “came in well above expectations,” but stress that the support quickly faded as “the impact was short-lived as broader themes took hold.” They add that “comments from the ECB have been limited and the speaking calendar is empty over the next week or so,” leaving the currency largely to trade on prevailing macro drivers rather than fresh policy signals.

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.

Joint intervention distorts dollar's strongest macro relationships EUR/USD tests January downtrend amid intervention threat Euro area data surprises strongest since early 2023 July payrolls to decide if dollar weakness persists EUR/USD is testing long-running downtrend resistance in early Asian trade on Monday, reacting to an artificial, and potentially temporary, slide in the dollar late last week. Rather than the economic calendar or technicals, it's likely the Japanese yen that determines whether resistance holds or snaps, with the threat of further joint intervention by Japanese and US authorities likely to dominate proceedings.

Yen intervention remains the dominant FX driver Markets widely expect Japan to announce on Monday that it coordinated with the US to support the yen last week, marking the first joint intervention by the two nations in decades. But the bigger question is whether authorities have finished.

As outlined in our USD/JPY week ahead report released over the weekend, prior intervention episodes suggest there's a strong chance of further action should yen weakness re-emerge. With USD/JPY already rebounding from the earlier session lows, the risk of additional intervention cannot be overlooked on Monday.

That points to further artificial downside in the dollar, driven by factors other than fundamental market forces. Should the intervention episode continue, it would likely provide another tailwind for EUR/USD, increasing the risk the recent rebound extends further.

However, whether that weakness lasts beyond the short term is another matter entirely. A heavy slate of US economic data, including Friday's non-farm payrolls report, will likely determine whether the move can grow into something more sustainable.

Traditional dollar relationships weaken

Source: TradingView

Assessing whether dollar weakness can be sustained is more difficult because some of this year's strongest relationships have weakened sharply over the past week. Over the past month, the US Dollar Index has continued to display a reasonably strong relationship with the Fed funds futures curve, reflecting market expectations for Fed rate hikes between June this year and June next year, along with US two-year Treasury yields, with 20-day correlation coefficients of 0.62 and 0.65 respectively.

However, over the past five sessions those relationships have deteriorated sharply. The correlation with the Fed funds futures curve has fallen to just 0.29, while the relationship with US two-year Treasury yields has weakened to only 0.14. Correlations with other drivers, including energy prices, have also deteriorated over the same period.

While month-end flows may explain part of the shift, the intervention episode unfolding in Japan also appears to be distorting the broader market message. What has driven the dollar for much of this year isn't necessarily what's driving it right now.

Euro data turns a corner

Source: LSEG Workstation

While intervention may be helping propel EUR/USD higher in the short term, it's not the only factor at work. Euro area economic data has staged a remarkable turnaround in recent months, with the Citi Economic Surprise Index, which measures whether data is beating or missing economists' forecasts, rebounding sharply from the lows seen during the early stages of the Iran conflict.

The recovery has been nothing short of V-shaped. Having languished in deeply negative territory in April, the index has surged to its highest level since early 2023, pointing to a growing prevalence of upside surprises across the euro area. Friday's inflation report only reinforced that trend, with both headline and underlying inflation accelerating, strengthening the case for another ECB rate hike.

By contrast, while the US economy continues to outperform, it is finding it harder to deliver upside surprises relative to elevated market expectations. That suggests EUR/USD's rebound is not solely a by-product of intervention-driven dollar weakness, with improving relative fundamentals also helping underpin the move.

The calendar takes a back seat

Source: TradingView

Speculation surrounding further intervention, along with the associated flows through the Japanese yen, are likely to remain the dominant influence on EUR/USD during Monday's session. As a result, the economic calendar may struggle to generate sustained moves unless it delivers a surprise.

Of the scheduled releases, US ISM services PMI looks the most likely candidate to spark a fundamentally driven move, although even that may be giving it too much credit in the current environment. The US Treasury's quarterly refunding announcement will also attract attention, but it's typically Wednesday's release detailing the composition of debt issuance that has the greater market impact.

The Senior Loan Officer Opinion Survey rounds out the calendar. While it has influenced markets before, it's a backward-looking report and, against this unique backdrop, its ability to generate meaningful volatility looks extremely limited.

Trendline showdown

Source: TradingView

Looking at EUR/USD on the daily timeframe, the technical stakes today are high with the pair now trading through downtrend resistance that's been in place since the highs set in late January.

The descending triangle structure that had contained price action last week was shattered following the Fed decision last Wednesday, delivering a breakout that saw EUR/USD push not only through former resistance at 1.1480, but also the 50-day simple moving average, extending the move into a test of the long-running downtrend. That becomes the key level to watch today, along with the 100-day simple moving average sitting marginally above at 1.1569.

A clean break and close above the trendline would strengthen the view that a trend change may be taking place, opening the door towards the 23.6% Fibonacci retracement of the January 2025 to January 2026 bull move at 1.1633, which also coincides with the 200-day simple moving average. Beyond that, 1.1670 is the next level to watch, with a break above opening the door towards 1.1800 and 1.1850.

On the downside, should the downtrend continue to cap gains, a reversal back towards the confluence of the 50-day simple moving average and former resistance at 1.1480 may be on the cards. A break beneath that would open the door for a retest of the support zone comprising the 38.2% Fibonacci retracement of the January 2025 to January 2026 bull move, horizontal support at 1.1364, and the June 24 swing low at 1.1325.

The oscillators continue to favour further upside. RSI (14) continues to push above the neutral 50 level without entering overbought territory at 64, while MACD has confirmed the bullish signal with a crossover above the signal line and a move back into positive territory. However, that message comes with the caveat that artificial factors have played a significant role in the latest bout of euro strength.

Danske Bank says EUR/USD’s break above 1.1500 has challenged its bullish Dollar view, with further declines in US real yields likely to place its short-Euro position under increasing pressure. The Euro to Dollar exchange rate ended July near 1.1530 after the post-Federal Reserve Dollar selloff carried the pair decisively above 1.1500.

EUR/USD gained just over 1% during July, recovering from a monthly low near 1.1354 and reaching a high around 1.1547. The pair remains 1.7% lower since the start of 2026, having traded between January’s peak at 1.2075 and a June low of 1.1325.

Image: Euro-to-Dollar exchange rate chart - 3 month timeframe Danske Bank said “modestly stronger-than-expected Q2 GDP and July flash inflation data from the largest euro area economies supported EUR”, but stressed that domestic European data were not the main reason for the move.

Instead, the bank said “the main driver behind EUR/USD rising above 1.15 has been the post-FOMC decline in US real rates.”

Nominal US yields fell following the Federal Reserve meeting, while medium and longer-term inflation expectations moved higher. According to Danske, this reflected markets reassessing “Kevin Warsh’s commitment to bringing inflation back to target”.

That combination lowered inflation-adjusted US yields and weakened one of the central supports for the Dollar.

The effect was not confined to the Euro. Danske noted that “the same effect could be seen across other risk-sensitive currencies as well”, with easier financial conditions supporting the Swedish Krona, New Zealand Dollar and South African Rand.

For the bank, the market reaction directly challenges its recent positioning.

“The shift does challenge our recent USD-positive narrative,” Danske said, adding that this view had been “underpinned by expectation of the Fed remaining on a firm tightening bias.”

The bank is not abandoning the prospect of further US rate increases. It said: “We still think the macro case for the Fed hiking rates is very much alive.”

That remains the foundation of its medium-term case for renewed Dollar strength. Sticky inflation, resilient activity and the risk that the Fed ultimately tightens more than markets now expect could restore support to US yields.

The immediate risk, however, has moved in the opposite direction.

Image: EUR/USD chart - performance so far in 2026 Danske conceded that “tactically, further decline in US real rates would certainly put our recent short EUR/USD recommendation under even more pressure.”

The technical backdrop has improved alongside the change in rates. EUR/USD has moved above both its 20-day and 50-day moving averages after spending much of July below them.

A sustained hold above 1.1500 would leave the recovery intact and bring the 1.1600-1.1665 region back into focus. The latter marked the upper part of June’s trading range before the Euro’s slide towards 1.1325.

The broader three-month trend remains less convincing. EUR/USD is still below May’s highs near 1.1800 and has fallen around 1.7% over that period.

Danske’s forecast therefore hinges on whether the post-Fed fall in real yields persists. A further decline would reinforce the Euro’s breakout and threaten the bank’s short position, while a recovery in real rates and renewed expectations of Federal Reserve tightening could pull EUR/USD back towards 1.1400.

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

US Dollar Talking Points: Coming into this week there was a one-in-three chance for a rate hike at the Fed, which sounded peculiar to me as many were calling for bullish breakouts in the USD. As looked at in the webinar on Tuesday, it was the USD/JPY backdrop that mattered most and the pair reversed aggressively as allegations of US and Japanese coordination drove prices lower.

Market hopes for a rate hike from the Fed were dashed but it’s the response to that which is defining the week, at this point.

The initial pullback in USD/JPY was bid as buyers jumped in at the support I looked at in the post-Fed article. But then on Thursday night, right around the European open, selling began to show in USD/JPY. That move looks like it was intervention from Japan and reports circulating on Thursday appeared to echo that. But perhaps the larger move was in the pair around the cash equity open as USD/JPY slid aggressively around 9:30 AM and that led to circulating rumors that the New York Fed performed another ‘rate check,’ calling member banks like what happened back in January.

While the NY Fed has access to rates the act of actual calling banks can be seen as a possible precursor to an intervention. And that (allegedly) was ramped up on Friday morning as the circulating rumor was that the New York Fed was calling banks to warn that there might be action later in the day. This brought another wave of weakness as the bounce in USD/JPY was eviscerated, and the pair returned back-below the 160.00 level.

For next week this is the big theme, whether we see more profit taking and risk aversion from longs as it seems as though both sides of the pair have interested parties trying to talk the price lower.

In USD/JPY, it’s the 155 area that’s of interest for a deeper pullback or sell-off, as this was the resistance that showed after the breakout from the Takaichi election last year.

USD/JPY Daily Price Chart Chart prepared by James Stanley; data derived from Tradingview USD Despite the chaotic second half of the week the DXY basket held well with the levels looked at on Tuesday. With a couple hours until the weekly close price is testing below the 100-level in DXY but the 100.36-100.44 zone came in as lower-high resistance, and for next week, that combined with 100.65 and 100.86-101 serve as resistance for bearish continuation scenarios.

US Dollar Four-Hour Chart Chart prepared by James Stanley; data derived from Tradingview EUR/USD The Euro is a whopping 57.6% of the DXY basket, but when we consider how long and built-in that carry trade is in USD/JPY, it makes sense as to why flows there could impact the larger major market of the Euro.

That was on display this week as EUR/USD broke out of a falling wedge around the Fed, and then ran up to above the 1.1500 level as USD broke down with the USD/JPY move.

For next week, 1.1500 is now a level for bulls to defend, with 1.1469 below that and then 1.1436.

EUR/USD Four-Hour Chart Chart prepared by James Stanley; data derived from Tradingview --- written by James Stanley, Senior Market Analyst, Global Macro

The EUR/USD pair closes July with modest gains near the 1.1500 mark, adding over 1.1% in the last trading week. Price action throughout the month was dull to say the least as investors remained clueless, although the pair managed to hit 1.1530 ahead of the close. The lack of action was compounded by persistent uncertainty, centered on developments in the Middle East and the United States (US) Federal Reserve’s (Fed ) monetary policy path.

Regarding the first, an escalation of the US-Iran war spurred US Dollar (USD) demand at the beginning of the week after continued tit-for-tat attacks around the Strait of Hormuz, which, by the way, is once again closed. Mood improved early in the week amid a pause in attacks and headlines suggesting a fresh round of negotiations.

Renewed war headlines, however, were quickly overshadowed by the US Fed monetary policy announcement on Wednesday. The USD plunged after the central bank decided to leave the benchmark rate unchanged, with the split vote leaving it at a range of 3.50%-3.75%. Three regional bank presidents dissented, preferring an immediate 25-basis-point (bps) rate hike: Cleveland's Beth Hammack, Minneapolis's Neel Kashkari, and Dallas's Lorie Logan.

Chairman Kevin Warsh chickens outThe USD collapsed following the Fed’s decision as investors believed Chair Warsh had chickened out. He kept repeating his commitment to curb inflation and to price stability, but the Fed left rates unchanged for the fifth consecutive meeting.

Of course, he did not provide clear guidance on the future path of monetary policy, not actually a surprise. And he failed to specify how he intends to resolve five-year-long inflationary pressure despite affirming that there is no “soft” inflation target.

“We are on the job, we will deliver, we are focused like a laser on making sure we can do it, but the suggestion that we're going to be able to do it with our magic wand is one I want to disabuse you and everyone else of,” Warsh said.

Market players did not take well to the myriad empty words and the lack of action. However, bets on a September rate hike have increased after the dust settled. According to the CME FedWatch Tool, the chances of a hike increased to 65% from 55% one week before the Federal Open Market Committee (FOMC) announcement.

Still, there’s a long way ahead of September, and loads could happen in the way. The focus will remain on data — inflation and employment figures — and Middle East developments.

Meanwhile, the US published the preliminary estimate of the Q2 Gross Domestic Product (GDP), which showed that the economy expanded at an annual rate of 1.5%, missing expectations and below the Q1 reading of 2.1%. Other details of the report showed that the GDP Price Index jumped to 6.3% in Q2 from 3.6% in Q1, while the quarterly core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge, increased 3.3% on a yearly basis, matching the market expectation. In June, the core PCE Price Index ticked lower on a yearly basis, to 3.3% from 3.4% in May, still far above the Fed’s 2% goal.

Middle East crisis here to stayUS President Donald Trump said for the umpteenth time on Friday that the war is “going well” and that the US “keeps winning.” No strikes between Washington and Tehran were reported by the end of the week, a short truce that at least was enough to contain fears. Still, unrest leads the region as traffic through the Strait of Hormuz declined to the levels seen before the Memorandum of Understanding (MoU), while Kuwait and Egypt reported Iranian attacks early Friday.

On a positive note, US President Trump announced an historic agreement to secure the disarmament of Hamas, while a senior Hamas official confirmed it to CNN, contingent on Israel upholding its obligations. This is the first time Hamas has agreed to a specific plan to hand over weapons.

The song remains the same: the US demands Iran drops its nuclear program, while Iran requests full control of the critical sea passage. Neither side is willing to give up on those terms.

Euro finds support in dataData coming from Europe provided support to the Euro: Germany and the Eurozone (EU) released the preliminary estimates of the Q2 GDP. Annualized growth in Germany rose 0.9%, modest yet better than the 0.4% posted in Q1. The EU figure printed at 1%, up from the previous 0.3%.

German inflation met expectations as the preliminary estimate of the July Harmonized Index of Consumer Prices printed at 2.8% YoY, higher than the 2.4% from June. The EU HICP in the same period resulted in 2.5%, in line with expectations and slightly above the previous 2.4%.

Still, financial markets price in roughly a 65% probability that the European Central Bank (ECB) will deliver a 25 bps rate hike at the September meeting. Again, too early to speculate about that.

Regardless, European data was encouraging enough to spook concerns, which ended up helping the Euro on its way north. It should not be a surprise, however, if the Greenback resumes its rally on the back of war-related fears.

What’s next in the docketThe first week of August will be a busy one. Germany will kick-start macroeconomic releases by publishing June Retail Sales, while the US will publish the ISM Manufacturing Purchasing Managers Index (PMI) on Monday. The ISM Services PMI will be out on Wednesday, while EU June Retail Sales are scheduled for Thursday.

S&P Global, alongside local banks, will release the final estimates of the July PMIs for major economies throughout the week.

Midweek, the focus will turn to employment as the US releases June JOLTS Job Openings, the July ADP Employment Change report, and July Challenger Job Cuts ahead of the July Nonfarm Payrolls (NFP) report scheduled for Friday. The US is expected to have added 91K new jobs in the month, up from the 57K added in June, while the Unemployment Rate is foreseen at 4.3%, up from the 4.2% posted in June.

EUR/USD Technical Outlook:From a technical perspective, based on the daily chart, EUR/USD has partially recovered its bullish poise. The pair has run past a now mildly bullish 20-day Simple Moving Average (SMA) at 1.1430, although it remains below the 100-day and 200-day simple SMAs at 1.1568 and 1.1631, respectively, keeping the broader backdrop bearish despite the latest bounce. The 14-day Relative Strength Index (RSI) indicator turned lower but stands at 58, while the Momentum indicator holds flat above its midline, suggesting that buying interest has improved, though not enough to confirm a trend change.

In the weekly chart, EUR/USD maintains a mildly bearish near-term bias, holding below the 20-week SMA at 1.1565 while still trading above the 100- and 200-week SMAs at 1.1311 and 1.1032, respectively. Technical indicators have rotated higher, but remain below their midlines, reflecting the latest advance yet far from suggesting a bullish extension ahead.

On the topside, initial resistance is at the 100-day SMA near 1.1568, with the 200-day SMA at around 1.1631 as the next significant barrier if buyers extend the advance. On the downside, immediate support emerges at the 20-day SMA at 1.1424, where a break would expose a deeper pullback toward the June low at 1.1324.

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

Fed credibility questions underpin USD SSA spreads as EUR and GBP seen outperformingAccording to TD Securities, recent price action has seen "US swap spreads have tightened, and the yield curve has steepened," reshaping relative value across rates and credit markets. The bank argues that "questions around the Fed's credibility are supportive for USD SSA G-spreads," and, in this context, it "look[s] for front-end EUR and GBP to outperform vs USD" as investors reassess opportunities along the front end of major curves.

The US dollar continues to fight back, as we are looking to resume some of the previous trends.

PREMIUM

Read what the experts are trading this weekExclusive analysis from FXEmpire top analysts — curated insights you won't find on the free site.

In-depth analysis

Curated reports

Top analysts

Unlock Premium

EUR/USD Technical Analysis

EURUSD trades around 1.14856, rebounding from the 1.140 area but staying below its 200-day EMA at 1.15583. Source: TradingView. The euro has pulled back a bit during the trading session here on Friday as we are now testing the 50-day EMA. The 50-day EMA being broken below would open up a move down to the 1.14 level, a large round, psychologically significant figure that has been pretty strong support recently. To the upside, we have the 200-day EMA at the 1.1558 level offering resistance. We will just have to wait and see how that plays out, but a break above there would be very strong.

USD/CAD Technical Analysis USDCAD trades around 1.40487 after easing from the 1.425 high, holding above its 50-day EMA at 1.40338. Source: TradingView. The US dollar is recovering against the Canadian dollar early during trading as the market continues to bounce around the 50-day EMA. Breaking above here could send this market challenging the 1.4150 level. The 1.40 level underneath is a floor in the market, and I think it continues to be a major area of concern. It had previously been significant resistance, so market memory would suggest that perhaps there will be buyers here. Plus, we have the 200-day EMA race towards that area. Interest rate differential still favors the US dollar, so this is part of what is playing out in this market.

USD/CHF Technical Analysis

USDCHF trades around 0.81081, holding above its 50-day EMA at 0.80469 and 200-day EMA at 0.79910. Source: TradingView. The US dollar against the Swiss franc has rallied quite nicely after a couple of rough days. We are now breaking above the 0.81 level, bouncing from the 50-day EMA, adding more possibility of a break higher and the ability to collect swap yet again. Over the longer term, I do think this is a market where the interest rate differential will be the main story. The Swiss National Bank does not want a strong Swiss franc anyway, so momentum suggests that the buyers are still very much in control.

If you’d like to know more about how to trade forex, please visit our educational area.

Related Articles

USD/JPY, Copper, and DAX and Forecasts – BoJ Intervention & Inflation Risks Drive VolatilityUS Dollar Price Forecast: Dollar Retreats as ECB and BoE Hold Policy Steady; EUR/USD and GBP/USD RallyUSD/MXN Forecast: How Long Does the Peso’s Carry Trade Have Left to Run?About the Author

Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.

Market news from the European morning session - 31 July 2026

Headlines:

How have interest rate expectations changed after this week's events?BOJ governor Ueda says to expect to keep raising interest rates in response to economic, financial conditionsBOJ governor Ueda says will conduct monetary policy in a manner so as to not fall behind the curveBOJ leaves rates unchanged as expected. Vote was 8-1ECB's Kocher: Decisions to be based on incoming data to bring inflation back to the 2% targetEuro area inflation nudges up in July, keeps the pressure on the ECBFrench inflation accelerates in July, reaffirming the broader trend in the regionItaly July preliminary CPI +2.8% vs +2.8% y/y expectedGerman unemployment rises by slightly more than anticipated in JulySouth Korea's KOSPI extends rebound in closing stages of the week, now up 17% todayMarket update:

USD and AUD lead, CHF lags on the dayWTI crude up 0.7% to $84.20European indices mostly higher; S&P 500 futures up 0.5%US 10-year yields up 1.2 bps to 4.675%Gold down 1.1% to $4,057Bitcoin down 1.3% to $63,887As we count down to the end of the month, markets are still seeing some volatile swings in ending the week.

The rebound in tech shares continues after South Korea's benchmark KOSPI index posted near 18% gains today. And that's setting a more positive backdrop for broader markets.

European stocks are pushing modestly higher with the DAX up 0.7% and CAC 40 up 0.9%, while US futures are posting solid gains as well in looking to wrap up the week. S&P 500 futures are up 0.5% with Nasdaq futures up 1.3% currently. No hyperscaler worries this week is also helping to bolster the mood, for now at least.

Besides that, we once again had another taste of Japanese yen volatility with a suspected second round of intervention. USD/JPY recovered well from yesterday's drop to settle above 160.00 today before being shot back down to 158.55 in a jiffy during the session. It was a gradual recovery after but one that is quick to see the pair move back up by 0.3% to 160.05 currently.

At the same time, the dollar is seeing a modest bounce as well with EUR/USD down 0.3% to 1.1495 and USD/CHF up 0.5% to 0.8095 on the day.

In terms of economic data, we had euro area inflation numbers for July and they were a tad hotter than expected. That will just serve to keep the ECB on their toes ahead of a likely rate hike again in September.

In other markets, oil prices are settling just a little higher with WTI crude up 0.7% to $84.20 and 10-year Treasury yields also just a touch higher by nearly 2 bps to 4.68%. Meanwhile, gold is seen down 1.1% to $4,057 as the back and forth continues for precious metals.

Most Popular

investingLive European markets wrap: Eurozone inflation ticks up in July; USD/JPY intervention again?How have interest rate expectations changed after this week's events?ECB's Kocher: Decisions to be based on incoming data to bring inflation back to the 2% targetEuro area inflation nudges up in July, keeps the pressure on the ECBItaly July preliminary CPI +2.8% vs +2.8% y/y expectedStealth intervention causes wild swings in USD/JPY; focus stays on Middle East and next US CPIGerman unemployment rises by slightly more than anticipated in JulyGold fails to extend gains as traders await the US CPI and Middle East developments BOJ governor Ueda says will conduct monetary policy in a manner so as to not fall behind the curveFrench inflation accelerates in July, reaffirming the broader trend in the region