The EUR/USD has turned lower in a powerful manner the past handful of days. The currency pair is showing downside pressure and is below the 1.14400 mark as of this writing. Last Thursday the EUR/USD was near the 1.17900 vicinity as selling started to develop. Traders who have been anticipating reversals higher the past couple of day as the EUR/USD fell through key support levels have been disappointed and have likely taken a hit to their trading accounts.
The U.S Fed last night surprised few by remaining overly cautious. The EUR/USD was near the 1.15500 juncture at one time yesterday, but continued to sell off instead of producing a fight upwards. As Jerome Powell, the Federal Reserve Chairman, spoke yesterday the EUR/USD fell through the 1.15000 ratio. The currency pair has sustained value beneath the 1.14500 this morning. Those looking for a reversal higher because they believe the EUR/USD is oversold need to be careful.
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Risk Events and Reactions that Appear Complex
The EUR/USD started the month of July near the 1.18350 level putting in its apex height to start the month, but as August approaches the currency pair is traversing waters within depths not seen since the second week of June. Looking for a tide that lifts the EUR/USD at this moment may feel logical, but complex shifts of sentiment have made financial institutions nervous. Yesterday’s caution from the Federal Reserve was anticipated, but perhaps the stern cautiousness from the Fed Chairman caused more anxiety.
Powell doesn’t appear ready to cut interest rates anytime soon. Powell continues to press upon the uncertainty button regarding the potential effects from tariffs. However, in the meantime the U.S GDP numbers came in better than expected yesterday and so did the GDP Price Index. U.S growth was stronger and inflation was weaker. Yet the Fed continues to worry about tariffs. The EUR/USD has sold off massively in the past week and it does look oversold. Also intriguingly, the E.U and U.S reached a trade agreement last weekend, but that hasn’t helped the EUR become stronger either.
Speculative Zeal and Over-Confidence in the EUR/USD
Perhaps some of the selling in the EUR/USD can be explained away by claiming financial institutions simply overbought the currency pair in late June and early July. The EUR/USD did fall to a low of nearly 1.15600 on the 16th of July, this before incrementally producing upwards price action until last Thursday’s highs on the 24th.
- The fall to current depths will cause another reaction, traders with a bullish perspective and thoughts about a turnaround are likely trying to calculate where durable support levels will flourish.
- Tomorrow besides the tariff rhetoric which will make noise (it will talked about today too), the U.S jobs numbers will be posted.
- Day traders looking for technical support may believe current levels are attractive, more conservative traders may believe the 1.14300 to 1.14000 levels are a better approach.
- How low can the EUR/USD move before folks step in and start buying?
- Stubborn bulls will need to be careful, because the downturn the past week has not been good, but the velocity of the selling may mean the move is overdone too.
EUR/USD Outlook for August 2025:
Speculative price range for EUR/USD is 1.13895 to 1.16600
Traders looking for downside in the EUR/USD at this point should also be careful. If you have been a seller of the EUR/USD the past week then you deserve a round of congratulations. The selling in the EUR/USD has certainly been stronger than anticipated by many analysts. Financial institutions who have been selling the past week are likely redefining their mid-term outlooks.
The danger is that the Federal Reserve is keeping the U.S interest rate much higher compared to many of the major currencies via other central banks. The EUR/USD is suffering a downturn and Jerome Powell did little to convince people he will start cutting interest rates anytime soon. Right or wrong the U.S Fed stays stubborn. Traders who are bullish about the EUR/USD and expect a turn around need to understand the Federal Reserve and its effect on financial institutions is stronger than the thoughts of speculators who have mere opinions. July proved to be a volatile month, difficult price action may remain a centerpiece in August.
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