Created on August 01, 2025

• The Euro rallied just a touch during the trading session on Thursday, as we continue to see a lot of noisy behavior.
• The market has recently seen a whole lot of downward pressure, especially now that the Federal Reserve seems to be more hawkish than anticipated, and therefore it’s likely that the US dollar will continue to be stronger overall.
• Contrast that with the Euro, which has seen a trade deal with the United States, which quite frankly, is not very good for Europe.

Breakdown?

Because of this, we have to ask the question as to whether or not we are about to see a breakdown. The market broke down below the 1.15 level, and the 50 Day EMA, both of which are very negative turns of event. The market being sub 1.15 is rather telling, and I think you’ve got a situation where people are going to be looking for some type of continuation. The jobs number on Friday could be the next catalyst, we don’t know, but quite frankly if the jobs number comes out hotter than anticipated, this will be yet another reason to think that the Federal Reserve will stay hawkish and stay away from cutting rates. On the other hand, the Europeans have to deal with quite a bit of energy dependence on the United States, and that’s something that we may have to watch from a longer-term standpoint.

On the other hand, if we were to break out to the upside, it’s not until we recapture the 50 Day EMA at the very least that I would consider buying. In that environment, we would probably see the US dollar drop significantly against most currencies, not just the Euro. Ultimately, this is a situation where it’s likely that the Euro would just be benefiting from US dollar weakness rather than any real strength at that point. Ultimately, I think this is a market that continues lower if the jobs number comes out significantly higher than the expected 106,000 jobs added in the United States.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.