EUR/USD is holding near 1.1670 as ING keeps 1.17 for September and 1.18 year-end, with US policy risks still weighing on the Dollar.

The Euro to Dollar (EUR/USD) exchange rate is holding around 1.1670 on Wednesday after a strong late-August advance carried the pair through several resistance levels that had frustrated Euro bulls earlier this month.

EUR/USD was quoted at 1.1669 early in the European session, having gained around 2.45% over the past month and reached a high of 1.1711 during the latest rally.

Currency analysts at ING remain reluctant to call a bottom in the broader Dollar decline.

“Most paths seem to lead to a weaker dollar, but Kevin Warsh’s speech on Friday could prove supportive,” ING’s Chris Turner said.

The bank believes positioning may still have further to adjust after the Dollar’s strong run earlier in the summer.

“There may still be room for further USD long-squeezing, and we remain reluctant to call the bottom in this dollar selloff just yet,” Turner added.

That view has gained some support from the wider market backdrop.

The Dollar index was hovering close to a three-month low on Wednesday after US Treasury measures aimed at limiting pressure on long-term bond yields added another source of uncertainty around the Greenback.

Reuters reported on Wednesday that EUR/USD was around 1.1661 as traders waited for US PCE inflation and Warsh’s Jackson Hole address, with Standard Chartered also warning that attempts to push US rates lower could create another Dollar headwind.

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The one-month chart shows the scale of the change, with EUR/USD climbing from below 1.1400 in late July to above 1.1700 before consolidating around 1.1670.

Euro (EUR) Positioning Still Leaves Room for Buyers

ING also sees the futures market as relatively supportive for the Euro rather than dangerously crowded.

Asset managers and leveraged funds have been buying Euro contracts, although Turner stresses that the overall positions remain fairly modest.

“Speculators look quite underweight the euro,” he said, noting that the available positioning data also pre-dated last week’s sharp EUR/USD breakout.

That leaves scope for further buying if US rate expectations or confidence in the Dollar soften again.

The European data backdrop has meanwhile improved.

ING had expected Germany’s August Ifo survey to continue recovering, and Tuesday’s release was stronger than forecast, with the business climate index rising to 88.8 from 86.7 against expectations near 87.2.

German GDP growth was also revised up to 0.3% quarter-on-quarter for Q2, giving the Euro a somewhat firmer domestic foundation than it had earlier in the summer. Reuters reported that business confidence improved across all major sectors.

As we noted in our earlier ING EUR/USD forecast, the bank’s 1.18 year-end call originally rested heavily on softer US employment data reducing the case for further Fed tightening.

The latest move has brought spot much closer to that destination.

Near-Term EUR/USD Forecast: 1.1660/70 Is the Immediate Line to Watch

ING’s technical reference point is particularly timely because EUR/USD is sitting almost directly on top of it.

“We do not really see the need for EUR/USD to come back sharply under support at 1.1660/70 today,” Turner said, although he warned that last week’s breakout area could come back into play if risk assets suffer a broader setback.

That support zone now separates a fairly orderly consolidation from a more meaningful reversal of the recent Euro rally.

There is also an interesting contrast with our recent MUFG EUR/USD analysis, when the 1.1630 area was still acting as resistance and MUFG warned that the Euro looked rich relative to short-term fundamentals.

EUR/USD has since broken above that level and held there.

ING nevertheless sees Friday’s Jackson Hole speech as a genuine risk to the bullish picture.

“The speech could be a hawkish event risk for the dollar,” Turner said, with Warsh expected to reinforce the Fed’s inflation-fighting credentials after his July press conference unsettled the Treasury market.

Before then, traders face July PCE inflation, with the US Bureau of Economic Analysis due to publish the Fed’s preferred inflation measures later on Wednesday.

ING Keeps 1.18 Year-End Target

ING has not been tempted to raise its forecasts simply because spot has moved rapidly higher.

“At present, we are happy with our current forecasts for EUR/USD at 1.17 end September and 1.18 for end year – but will be reviewing those this week,” Turner said.

With EUR/USD already near 1.1670, the 1.17 September target is now effectively within reach.

The more interesting question is whether softer US policy expectations, improving European data and relatively light Euro positioning can carry the pair towards 1.18 without first producing a deeper correction.

Our euro to dollar forecast for th short-term is 1.1660/70 is the level that should tell us whether the latest breakout is being consolidated or beginning to unwind.

The pair’s price failed to reach the resistance barrier near 217.85, while it is currently reacting to the attempt of the Stochastic indicator to exit the overbought zone, forcing the pair to move in mixed sideways trading and fluctuate around 216.75.

We emphasize the importance of maintaining trading above 216.35 during the current period, as this would allow the pair to renew its bullish attempts and push toward the aforementioned resistance barrier. A breakout above this level would confirm its transition into a new positive phase, extending the move directly toward 218.35 and 218.65. On the other hand, slipping below 216.35 would force the pair to activate the bearish corrective scenario, targeting 215.55 initially.

The expected trading range for today is between 216.50 and 217.85

Trend forecast: Bullish

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The euro initially gapped higher against the Pound on Monday but has since loosened its grip.

EUR/GBP

The euro initially gapped higher against the British pound to kick off the week but has since fallen a bit to continue the overall consolidation that we have seen. It looks like the 50-day EMA has come into the picture to cause a little bit of a headache.

The euro leg seems to be the big story here as German flash manufacturing PMI hit its strongest level since 2022 on defense spending, and the broader read is Eurozone activity is still expanding in August with manufacturing improving. That keeps the ECB hike story alive, but the higher-for-longer UK rates trade is starting to flex its muscles later in the day.

Keep in mind that there are concerns about the sanctions coming from the United States for the Iranians. Will this tighten the oil supply even further? And the European Union is particularly vulnerable to this, not to mention the fact that the liquefied natural gas coming from Qatar could be affected as well.

Consolidation and Breakdown Risk

Quite frankly, the biggest prints coming out of the United Kingdom have already passed mid-month, thinking about CPI and jobs, so there aren’t any Tier 1 UK releases scheduled this week. That in and of itself might help the British pound continue to flex its muscles.

We’ve been in a downtrend. We pulled back to test the 50-day EMA a couple of times. Now the question is, will we break down below this consolidation, which is basically seeing support near the 0.8530 level?

The German IFO numbers come out tomorrow. That will have a major influence on the euro if it shocks the market. But as things stand right now, this looks very much like a market that just simply wants to continue its consolidation, perhaps with a little bit more of a bearish hint to it than anything else. I’ll be watching that 0.8530 level to see if we break down.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

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David Woodsmith

STORY LINK GBP/USD Forecast: Pound Eyes 1.37 as Dollar Risks Mount

The Pound to Dollar (GBP/USD) exchange rate maintained a firm tone on Tuesday, trading around 1.3630-1.3640 and holding close to Friday’s six-month high above 1.3670.

Pound Sterling has struggled to extend its advance, but the Dollar remains under pressure amid persistent concerns over US fiscal policy, trade tensions and the credibility of recent Treasury intervention in the bond market.

GBP/USD reached 1.3675 at the end of last week before correcting modestly, with the pair retaining a generally bullish technical tone.

On a short-term view, UoB sees scope for GBP/USD gains towards 1.3700, but added; “On the downside, if GBP breaks below 1.3585 it would mean that 1.3700 is out of reach.”

Scotiabank maintains a positive outlook on the Pound; “Underlying trend dynamics remain solidly bullish and, after a period of range trading and two tests of 1.3150, a sustained push above 1.3650/60 implies potential for an extension towards the 1.41 zone over the balance of the year.”

Canada Trade War Adds to Dollar Risks

US policy developments remain a dominant influence on currency markets this week.

Trade tensions with Canada have intensified sharply following the collapse of negotiations.

Canada announced retaliatory tariffs on around $20bn of US goods on Tuesday, matching recent US tariffs dollar-for-dollar.

The measures cover hundreds of products and are due to take effect in September.

President Trump has also threatened to impose 50% tariffs on Canadian cars, trucks and automotive parts from January 2027, increasing concerns over disruption to highly integrated North American supply chains.

ING had commented; “With a new chapter in the US-Canada trade war opening up over the weekend, the question will be to what degree the new sanctions on Iran threaten US trade ties with China again.”

The bank added that a significant re-escalation in the tariff conflict would probably be negative for the Dollar.

Iran Sanctions Produce Limited Dollar Support

US Treasury Secretary Scott Bessent also announced an expansion of sanctions against Iran on Monday.

The measures are intended to restrict Iran’s access to the global financial system and target economic activity supporting Tehran.

However, Washington stopped short of immediately applying the most severe measures against China, Iran’s largest energy customer, reducing fears of an abrupt escalation in US-China tensions.

The announcement produced only limited support for the Dollar.

Markets remain cautious over whether sanctions will materially alter Iran’s behaviour or instead increase geopolitical and energy-market risks.

US Fiscal Policy Remains under Scrutiny

Fiscal policy is also attracting increasing attention following last week’s Treasury intervention in the bond market.

The Treasury doubled the size of buybacks of longer-dated government securities after the 30-year yield climbed to its highest level since 2007.

Bessent said on Monday that regularly scheduled Treasury auctions would continue despite the larger buyback programme.

The strategy remains controversial.

Billionaire investor Stanley Druckenmiller criticised the intervention this week, arguing that Treasury bond buying risks undermining the credibility of the world’s largest government debt market.

Concerns have also intensified after total US government debt surpassed $40trn.

MUFG commented; “We await US Treasury Secretary Scott Bessent’s details on addressing concerns over the fiscal outlook in the US but we along with market participants are very sceptical of anything meaningful coming from an announcement.”

It added; “A failure to cap yields would be viewed as a policy misstep that would undermine investor confidence and hurt the dollar while steps to cap yields would also likely undermine the dollar.”

This potentially leaves the Dollar in a difficult position.

A renewed surge in long-term yields could revive concerns over US debt sustainability, while more aggressive Treasury intervention could encourage investors to reduce exposure to the currency.

GBP/USD Forecast: Jackson Hole Could Decide the Next Break

Fed Chair Kevin Warsh’s Jackson Hole speech later this week is likely to become the next major test for GBP/USD.

The Federal Reserve remains caught between inflation that is still above target and a recent run of softer US employment, retail sales and inflation data.

Warsh will also be speaking against an increasingly sensitive political backdrop following Treasury efforts to contain long-term borrowing costs.

A hawkish speech could push Treasury yields higher and offer the Dollar some support, although another aggressive bond sell-off could revive broader concerns over US fiscal stability.

Conversely, a softer message would reinforce expectations that the Fed will leave rates unchanged in September and could push GBP/USD back towards 1.3675 and 1.3700.

A sustained break above 1.3700 would strengthen the bullish technical picture and bring the 1.3800 area into focus.

Initial support is located around 1.3585-1.3600, with a break below this region likely to undermine the current upward bias.

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