EUR/USD Holds 1.1700 as Fed Dovish Bets Collide With Trade Uncertainty

The EUR/USD pair is consolidating above 1.1707 after testing intraday highs of 1.1736, maintaining resilience despite thin U.S. trading volumes on Labor Day. August closed with the euro delivering a 2.4% monthly gain, its seventh positive month out of the last eight, underpinned by persistent dollar weakness and growing conviction that the Federal Reserve will cut rates at the September 16–17 meeting. Futures imply an 87–89% probability of a 25 bp reduction, while markets are debating whether a second cut before year-end is also possible.

Tariffs, Courts, and Trump’s Influence on Policy Drive Sentiment

U.S. trade policy is now a central driver for the EUR/USD. Fitch slashed its 2025–26 U.S. GDP forecast to 2.2% from 2.9%, citing tariffs that have risen to an effective 15–20% versus 2.5% last year. Oxford Economics estimates global GDP losses near $1 trillion over two years as higher tariffs filter through global supply chains. Meanwhile, a U.S. appeals court ruled Trump’s “reciprocal tariffs” illegal, but enforcement is delayed until October 14, giving the White House room to appeal. Trump has doubled down, claiming “More than $15 trillion” in investment depends on keeping tariffs intact. His rhetoric has fueled volatility, with investors weighing both the legal risks and the implications for Fed independence after his attempt to remove Governor Lisa Cook.

European Data Provides a Modest Cushion

Europe’s macro backdrop is mixed but slightly supportive for the euro. The Eurozone unemployment rate fell to 6.2% in July from 6.3%, reinforcing labor market stability. German inflation data surprised to the upside with HICP at 2.1% year-on-year, above 2% forecasts and the prior 1.8%. Manufacturing PMI for the bloc came at 50.7, higher than preliminary readings. These signals reduce pressure on the ECB to cut rates quickly, contrasting with the Fed’s dovish tilt. French political stress remains a drag: President Macron faces a confidence vote over his €44 billion budget package, and French 30-year yields surged to 4.46%, their highest since 2011, reviving worries about fiscal stability in the eurozone’s second-largest economy.

Technical Structure Suggests a Test of 1.1740–1.1830

Technically, EUR/USD trades above its 20-day EMA near 1.1662, keeping short-term momentum bullish. Resistance emerges at 1.1740, followed by 1.1785 and the July high at 1.1830. If bulls clear these levels, an extension toward 1.1900 is possible. On the downside, first support rests at 1.1695, then 1.1650, and finally 1.1610. The broader speculative range for September is framed between 1.1590 and 1.1850. RSI readings near 55 confirm moderate bullish bias, though intraday oscillators suggest short-term retracements cannot be ruled out.

Dollar Index Weakens as Fed Bets Intensify

The U.S. Dollar Index (DXY) has fallen to 97.55–97.70, down for four straight sessions. The decline reflects markets pricing Fed policy easing after core PCE rose 2.9% year-on-year, in line with forecasts but insufficient to prevent dovish repricing. Technicals show the DXY forming a descending triangle with support at 97.63, raising the risk of a slide toward 97.12 or even 96.74. This underpins euro demand, as institutional desks lean into the dollar selloff heading into U.S. labor data.

Labor Market Data Poses the Next Major Catalyst

Markets are focused on this week’s data avalanche: JOLTS, ADP, ISM services, and Friday’s Nonfarm Payrolls, expected at 78,000 jobs versus July’s 73,000. Unemployment is projected at 4.3%, a rise from 4.2%. A soft reading would likely fuel EUR/USD upside toward 1.1800, reinforcing Fed dovishness. A surprise beat, however, could see a correction back toward 1.1650. With CME futures showing nearly 90% odds of a September cut, the balance of risk suggests any downside will be capped, but intraday volatility will remain elevated.

EUR/USD Forecast Heading Into September

The euro-dollar cross enters September at 1.1710–1.1730, its highest levels in a week, holding a strong rebound from August’s low at 1.1575. The structure favors continued buying above 1.1650 with potential tests of 1.1740, 1.1785, and 1.1830 if data supports. A sustained move above 1.1830 would open the door to 1.1900, last seen in early summer. Conversely, a drop below 1.1650 would undermine bullish momentum and risk retests of 1.1610 or even 1.1528. Based on the balance of macro drivers, ECB stability, and Fed dovish tilt, EUR/USD remains tilted bullish, with traders favoring long setups into the September policy meetings.

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Created on September 01, 2025

EUR/USD Analysis Summary Today

• Overall Trend: Neutral with a bullish bias. Support Levels for Today: 1.1630 – 1.1580 – 1.1500.
• Resistance Levels for Today: 1.1740 – 1.1820 – 1.1900.

EUR/USD Trading Signals:

• Buy EUR/USD from the support level at 1.1590 with a target at 1.1800 and stop loss at 1.1500.
• Sell EUR/USD from the resistance level at 1.1755 with a target at 1.1600 and stop loss at 1.1820.

Technical Analysis of EUR/USD Today:

The EUR/USD rebounded higher, attempting to break resistance at 1.1700, supported by U.S. inflation data and tensions between Trump and Federal Reserve officials. The pair is trying to maintain most of its gains this year as markets assess global interest rate expectations and ECB policy amid growth slowdown concerns. According to recent economic calendar data, Germany’s inflation accelerated above expectations, surpassing 2%, while inflation in France, Italy, and Spain came in weaker at 0.8%, 1.7%, and 2.7% respectively. Overall, futures contracts suggest limited ECB rate cuts this year, although U.S. tariffs and weak growth still keep some expectations alive for potential cuts later in the year.

In the U.S., continued inflation and strong consumer spending in July highlight the challenge facing the Fed in cutting rates amid a weak labor market. According to forex trading platforms’ performance, the euro has gained 11% against the dollar so far this year, supported by European stimulus plans and U.S. financial uncertainty.

Will EUR/USD Rise This Week?

According to currency analysts, there are chances for EUR/USD to rise further if this week’s U.S. jobs data comes in weaker than expected, especially since markets are cautiously monitoring the Fed’s decision this month regarding a possible rate cut. Technically, the latest gains have pushed the RSI (14-day) toward 53, above the neutral line, while the MACD also confirms bullish momentum. However, bulls need more catalysts to fully confirm control, with the 1.1800 resistance break remaining the key signal.

Today’s EUR/USD trading will react to the Federal Reserve’s preferred US inflation reading, along with the Eurozone’s manufacturing and services PMI readings. Currency traders will be monitoring whether the EUR/USD pair can reclaim the 1.17 level, as concerns about the Federal Reserve and political pressure on the central bank continue to undermine the US dollar’s support.

Market sentiment toward the dollar remains negative as investors worry about U.S. political interference in the Fed, while political fears in the Eurozone have eased slightly. Today’s U.S. holiday may lower liquidity and affect trading performance.

Factors Affecting USD Trading:

According to forex experts, Fed policy and Trump’s pressure on the central bank remain key elements. For the September meeting, markets are pricing in an 85% probability of a rate cut. However, U.S. economic data has recently been slightly stronger than expected, reducing near-term aggressive selling pressure on the dollar. U.S. Q2 GDP was revised up to 3.3% annually from 3.0%, while initial jobless claims fell to 229,000 from 234,000 previously.

On the other front affecting currency exchange rates, political concerns in the eurozone have eased slightly, although significant tensions remain. The French government faces a confidence vote in the National Assembly on September 8, and if the outcome leads to unfavorable market outcomes, the door is open to further euro weakness. However, forex analysts view the situation with caution and warn that this is not a decisive moment for the euro, which will benefit from France’s previous improved economic growth and strong support from the European Central Bank.

Trading Tips:

Traders recommend selling EUR/USD on every upward move, avoiding excessive risk, and closely monitoring market-moving factors until the Fed meeting later this month.

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Created on September 01, 2025

• The British pound initially fell during the trading session on Friday, but it looks like the 50-day EMA is in fact going to give it a little bit of support.
• This probably shouldn’t be too much of a surprise because where does the strength in the British pound come from? It comes from America.
• So, the biggest thing here, I think, is the fact that US traders think that the US dollar falling is a good thing.

They are focusing on the fact that PCE numbers came out as expected. So, everybody still expects to see the Federal Reserve cut rates. Now, while that may be true, the reality is that the US dollar hasn’t exactly imploded since we got confirmation by the Fed that they’re at least thinking about cutting rates.

In fact, the massive candlestick from last week that was a result of this ended up closing right about where we are now. So, in other words, we’ve bounced around and not really gotten anywhere. Because of this, I think you have a situation where traders are looking at this through the prism of a market that is somewhat lost and confused, but it is trying to sort itself out. The 1.36 level above, I believe, is a significant resistance barrier, while the 1.34 level below is significant support.

We are Lost

In the meantime, this is a market that is just simply trying to figure out where to go longer term. The fact that we are sideways at this point doesn’t surprise me at all, mainly due to the fact that we are at the end of vacation season and a lot of institutional volume probably isn’t there. Once we break out of this 200 point range, the implied move is 200 points either higher or lower, which means if we were to drop to the downside, we would go hunting for the 200 day EMA.

If we break out to the upside, you’d be looking at the 1.38 level, which was an area of resistance during the previous massive swing high. So, I think it all lines up quite nicely. But right now, this is a market that doesn’t know where it wants to go.

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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.

– Written by


Frank Davies

STORY LINK Pound to Dollar Forecast: GBP Tipped to Break 1.38 Against USD

The Pound to Dollar exchange rate (GBP/USD) traded steadily around 1.35 last week, but the outlook is shifting as UBS forecasts a break above 1.38 with scope to challenge 1.40.

Dollar sentiment remains fragile amid growing fears over Federal Reserve independence, with President Trump locked in legal battles over control of the central bank.

Analysts remain divided, with UBS highlighting UK rate-cut delays as a source of Pound support, while HSBC warns that looming tax hikes could weigh on Sterling’s longer-term outlook.

GBP/USD Forecast: Fed Fears

UBS expects the Pound to Dollar (GBP/USD) exchange rate will break above 1.38 and challenge the key 1.40 area

GBP/USD was little changed during the week and traded around 1.35.

According to UBS Bank of England policy will be a key element; “the risk of a delay of the next rate cut has risen. This should lend further carry support to the GBP over the coming months.”

HSBC, however, remains cautious over the UK outlook; “With Labour backbench MPs against spending cuts and bond markets constraining new borrowing, chancellor Rachel Reeves is expected to raise taxes. News reports have speculated on a range of potential measures, including a possible surcharge or levy on banks that might hurt economic growth and weigh on GBP.”

Dollar developments are likely to dominate in the short term, especially with another key jobs report at the end of this week.

The Administration is continuing to push strongly for the Federal Reserve to cut interest rates.

President Trump is also engaged in a legal battle to fire Fed Governor Cook as well as gaining greater control of the central bank. The dispute is heading for the Supreme Court and the issue of reciprocal tariffs is also heading for the highest court after an appeals court ruled against the Administration.

Rabobank commented; “The administration is reportedly looking for ways to offer positions at the helm of regional banks as consolidation prize to those candidates who do not get selected as Powell’s replacement. It has not become clearer how Trump plans to achieve this exactly – or if he can. But the broadening of Trump’s attacks on the Fed should be more concerning.”

Scotiabank commented; “The USD has given back much of the July rebound over the course of August and we anticipate more losses in the months ahead behind easier Fed policy and investor convers over challenges facing US institutions.

There is a risk of unintended consequences which could damage the economy.

Commonwealth Bank of Australia currency strategist Carol Kong commented; “If markets perceive the FOMC’s independence as compromised, inflation expectations could become unanchored, driving long term interest rates higher.”

BNP Paribas considers that the Fed may have to compromise to avoid serious destabilisation; “Defusing a frontal clash with the White House, and thereby reducing the risks of an FOMC that would pursue overly stimulative monetary policy during that window, is the best way to entrench the soft landing Powell’s Fed has so far delivered.”

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TAGS: Pound Dollar Forecasts

The EURJPY pair began receiving extra positive momentum, to form bullish moves to settle near 172.10, confirming the stability of the suggested bullish scenario.

The main stability within the main bullish channel levels, forming extra support at170.45 level, these factors help to renew the bullish attempts, to expect surpassing 172.45 level and reaching the next target at 173.40, attempting to find an exit for resuming the bullish attack in the upcoming period trading.

The expected trading range for today is between 171.60 and 173.40

Trend forecast: Bullish