EURUSD has climbed back toward the 1.1690–1.1700 zone after rebounding from July’s low near 1.1390, buoyed by persistent US dollar softness and favorable policy divergence between the Federal Reserve and the European Central Bank. Surging expectations have driven the dollar’s decline—now near 94%—for a September Fed rate cut, following weaker-than-expected jobless claims and fresh concerns over Fed independence. While July saw the greenback notch its first monthly gain since December, broader positioning remains skewed toward continued weakness.
On the euro side, the ECB has held rates steady while maintaining a more cautious stance than the Fed, with only a slight chance of one additional cut before year-end. This relative policy stability and the dollar’s vulnerability have kept EURUSD anchored within its bullish channel and on track for further upside momentum.
Technically, the pair is consolidating in the mid-1.1600s, with support at 1.1650 and resistance between 1.1700 and 1.1730. A decisive break above the 1.1700 barrier could open the path toward the 1.18–1.20 zone, while a rejection from resistance risks sending the pair back toward 1.1600.
Traders are watching closely for the next catalyst from upcoming US inflation prints, Fed guidance, and ECB commentary, which could determine whether EURUSD extends its rally or slips back into a corrective phase.
1. US Dollar Under Pressure
The dollar has softened notably, with September Fed rate-cut odds surging to ~94% following weak jobless claims and geopolitical uncertainties surrounding Fed independence. While July saw a modest dollar rebound—its first since December—market positioning remains tilted toward continued dollar weakness.
2. Euro Gains Traction Amid Policy Divergence
EURUSD recovered from July’s low (~1.1390), rising back into its bullish channel near 1.1690–1.1700. Expectations of more imminent Fed cuts fuel this momentum versus a cautious ECB, which holds rates steady but may lean toward one more cut by year-end.
3. Technical & Trading Range
Technically, EURUSD hovers around mid-1.1600s with support at 1.1650 and resistance clustering at 1.1700–1.1730. A clean break above 1.17 could pave the way toward the 1.18–1.20 zone, while rejection risks a pullback to near 1.1600.
Summary
EURUSD remains buoyed by dollar vulnerabilities and policy divergence, trading in a 1.1650–1.1700 range. A breakout above 1.1700 could unleash further upside; failure to hold could retrace toward 1.1600. Monitor US macro data and Fed/ECB cues for the next catalyst.
EURUSD H4 Timeframe
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On this EURUSD H4 chart:
Price previously traded within a rising wedge pattern, consistently making higher lows while facing resistance near 1.1770–1.1795, which formed a clear supply zone (highlighted box).
A breakdown from the wedge occurred, with price sharply selling off and breaking through prior structure support near 1.1575, confirming a bearish shift in market structure.
Recently, price retraced upward but stalled just below the former trendline support, which now acts as resistance. This aligns with the lower boundary of the supply zone, making this a potential retest-before-drop scenario.
A black arrow projects a possible continuation lower, in line with the dominant bearish momentum.
Direction- Bearish
Target- 1.14572
Invalidation- 1.18254
CONCLUSION
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