EUR/USD Forecast: Time for a consolidation?

The US Dollar Index reaches fresh monthly highs, nearing 107.00.
USD rally remains supported by robust US data and Treasury yields.
Important inflation data from the Eurozone is scheduled for Thursday.

Matías Salord FXStreet

The EUR/USD has dropped for the seventh consecutive day, reaching its lowest level since January, falling below 1.0500. Despite occasional strength, the bias remains tilted to the downside, with no signs of a correction in sight. Market sentiment and upcoming inflation data from Spain and Germany on Thursday will be closely watched.

Comments from European Central Bank (ECB) members have had little impact on the markets. The central bank remains data-dependent, and this week's inflation figures will be critical for monetary policy expectations.

On Thursday, Spain and Germany will release their inflation figures. A rebound in Spain's annual consumer inflation rate is expected and a sharp decline in Germany's CPI. On Friday, Eurostat will release Eurozone CPI data. Persistent evidence of inflationary pressures would put the ECB in a challenging position, balancing the need for tighter monetary policy with a deteriorating economic outlook as confidence declines. Eurostat will release the Business and Consumer Sentiment Survey on Thursday.

The US Dollar continues to be the key driver, reaching fresh highs. The US Dollar Index has approached 107.00, its highest level since November. Despite declining equity prices, US Treasury yields remain near recent highs, with the 10-year yield climbing to 4.64%, the highest since October 2007.

Data released on Wednesday showed an unexpected increase in Durable Goods Orders of 0.2% in August, contrary to expectations of a 0.5% decline. On Thursday, the weekly Jobless Claims report, a revised reading of Q2 GDP growth, and Pending Home Sales data are due.

EUR/USD short-term technical outlook

The EUR/USD reached a bottom at 1.0488, the lowest level since March, just slightly above the year-to-date low of 1.0483. The pair is currently hovering around 1.0500, exhibiting a bearish bias, following a modest rebound. On the daily chart, the Relative Strength Index (RSI) dipped below 30, indicating oversold conditions. After seven consecutive days of declines, some consolidation appears likely, although downside risks persist.

On the 4-hour chart, the pair rebounded after reaching the lower boundary of a downward channel, suggesting the possibility of a correction or consolidation. However, a decisive break below 1.0480 could trigger an acceleration towards the next support area at 1.0455. The immediate resistance is located at 1.0550.

View Live Chart for the EUR/USD

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

GBP/USD: Daily gains remain capped by 1.3650

GBP/USD leaves behind Monday’s pessimism and advances marginally on Tuesday. Cable’s humble gains, however, appear to have met quite a decent resistance in the 1.3650 zone for now, in a context of a slight selling pressure hovering around the Greenback.

EUR/USD struggles to regain pace; gyrates around 1.1670

EUR/USD clinches humble gains around 1.1670 following Tuesday’s close on Wall Street. Indeed, marginal losses in the US Dollar encourages spot to set aside two dauly pullbacks in a row and maintain the 1.1700 barrier on the cross-hairs for now. Moving forward, US inflation tracked by the PCE and another revision of Q2 GDP data should keep investors entertained on Wednesday.

Gold struggles near $4,650 ahead of US PCE inflation data

Gold struggles around $4,650 early Wednesday after the previous day's two-way swings as traders await the US PCE data for cues about the Fed's interest rate path. The outlook could drive the US Dollar and the non-yielding bullion. Meanwhile, renewed hopes for a US-Iran peace deal, weak Oil prices, sliding US bond yields and diminishing odds of an immediate tightening by the Fed undermine the USD, which could likely limit Gold's downside.

Bitcoin posts strongest weekly gain since November 2024 as market activity surges

Bitcoin (BTC) has posted its strongest one-week gain since the November 2024 US presidential election, climbing 23% over the past week as spot market activity and institutional demand returned sharply, according to a Tuesday report from K33. The rally pushed Bitcoin from around $63,000 to over $80,000 by late Monday.

America’s self‑inflicted trade wound

I’m conflicted about the trade war that the U.S. has started with Canada. Let’s be clear: any representation that Canada has been taking unfair advantage of the U.S. or that they have been treating us badly for years is a bogus characterization. In reality, the shoe is on the other foot. It’s the U.S. that has been behaving badly.

Canada hits US goods with tariffs; The rate market sees a problem

On September 8, Canada begins charging its own importers 15%, 25% and 50% on roughly 700 lines of American goods. The measure is billed as dollar for dollar, and on the arithmetic of covered trade it is. What it is not is a tax on the United States.