Expectations of a dovish Federal Reserve policy in September remain the main driver for the currency market. The probability of a rate cut currently stands at 98%. Profit-taking and cautious investor interest in risk assets add to pressure on the US dollar.
EURUSD dynamics are shaped by the contrast between signals from the Fed and ECB, along with market reaction to fresh macroeconomic data. This review explores potential EURUSD scenarios in early September, considering revised US GDP figures, political pressure on the Fed, and developments within the eurozone.
EURUSD forecast for this week: quick overview
- Market focus
The EURUSD pair closed the week of 1-5 September near 1.1660, remaining in the middle of the recent months’ range.
The dollar index hovered around 98 following weak US labour data (JOLTS showed job openings down to 7.18 million, the lowest since September 2024) and revised GDP growth of +3.3% q/q. The likelihood of a 25-basis-point Federal Reserve rate cut in September increased to 98%, up from 86% a week earlier. In the eurozone, the August CPI confirmed a slowdown in inflation (2.1% y/y), with unemployment stable at 6.2% and the PPI down to +0.2% y/y.
- Current trend
The pair remains within the range between the 1.1570 support level and the 1.1740 resistance level. The dollar receives mixed signals: the likelihood of an imminent Fed rate cut weighs on the greenback, while strong GDP data and concerns over Fed independence amid political pressure from Donald Trump limit downside. The euro is supported by moderate inflation data and labour market stability.
- Outlook for 8-12 September
The baseline scenario suggests continued trading within the 1.1570-1.1740 range. Upside is possible on weak US labour data and dovish Fed commentary, with the pair likely to test 1.1830 in this case. A breakout below 1.1570 would increase pressure and shift the target towards 1.1380. Overall, the balance of factors remains neutral-to-cautious: the euro benefits from dovish Fed expectations and moderate eurozone data, while the dollar is backed by strong US macroeconomic indicators and demand for safe-haven assets.
EURUSD fundamental analysis
Eurozone inflation data confirmed a decline in price pressure.
The preliminary CPI came in at 2.1% y/y in August, matching forecasts (the previous reading was 2.0%). Core inflation also remains moderate. July unemployment held steady at 6.2%, indicating continued labour market tightness. Meanwhile, the July PPI showed a modest 0.2% year-on-year increase, below previous readings, confirming reduced inflation risks. Taken together, this data points to a gradual cooling of the region’s economy, which restrains the euro’s strength.
In the US, labour market conditions continued to weaken.
The June JOLTS data showed 7.181 million job openings, below the forecast of 7.380 million and the previous reading of 7.357 million, marking the lowest level since September 2024.
This week, investors also reviewed updated labour figures for August. Despite job growth, hiring momentum slowed, reinforcing expectations of imminent Fed easing. At the same time, the political factor persists, with Donald Trump’s pressure on the Federal Reserve and his attacks on Lisa Cook fuelling doubts about the regulator’s independence, adding to dollar volatility.
The key driver for the EURUSD pair remains Fed rate expectations. Markets now price in a 98% likelihood of a 25-basis-point rate cut in September. The euro remains supported by neutral inflation data and labour market stability in the eurozone, although the overall balance tilts in favour of the dollar as a safe-haven asset amid global political and debt instability.
EURUSD technical analysis
On the daily chart, the EURUSD pair is trading in a narrow sideways range around 1.1650. The key support level lies at 1.1570, with resistance at 1.1740. A higher resistance level is seen at 1.1830.
Bollinger Bands are narrowing, signalling consolidation and lower volatility. The price is hovering near the centre of the range, without clear momentum towards either boundary.
MACD remains near the zero line, indicating trend weakness and the lack of a strong impulse. The Stochastic oscillates in the mid-range, confirming neutral sentiment.
Overall, the technical picture remains sideways, with the euro hovering between the 1.1570 support level and the 1.1740 resistance level. The future direction will depend on upcoming macroeconomic releases.
EURUSD trading scenarios
The EURUSD sentiment for the week remains neutral to cautious. Markets now price in a 98% probability of a Fed rate cut in September, up from 86% the previous week.
The euro receives mixed signals: political tensions in France and dollar strength limit growth, yet the pair holds above 1.1620.
- Buy scenario (long)
Long positions are possible if the pair holds above 1.1620-1.1650. Further confirmation would come from consolidation above 1.1650 and weak US macroeconomic data. Targets are 1.1710 and 1.1740; in a positive scenario, the pair may advance towards 1.1830.
Stop-loss is below 1.1580; a breakout here would increase selling pressure.
- Sell scenario (short)
Short positions are viable if the pair breaks below 1.1580, especially amid strong US data and political uncertainty in the eurozone. Targets are 1.1500 and 1.1380 in the case of a sustained downward impulse.
Stop-loss is above 1.1675. Consolidation above this level would confirm a continued upward movement.
Summary
The EURUSD pair remains supported by expectations of a Federal Reserve rate cut in September. Markets now estimate the likelihood of a dovish move at 98%. Despite strong US economic data, including GDP growth and employment indicators, the dollar remains under pressure due to political instability around the Fed and tariff-related uncertainty.
Overall, sentiment remains moderately positive for the euro.
In the absence of new dollar catalysts, the pair has a chance to stay near the upper boundary of the current range.
Source: Roboforex