EUR/USD: Bulls lack conviction

The strong resurgence of the demand for the Greenback keeps buyers at bay on Monday, motivating EUR/USD to surrender a big chunk of Friday’s Powell-led pronounced bounce to the area beyond 1.1700 the figure.

EUR/USD Technical Overview

Resistance lines up at 1.1788 (July 24), prior to the YTD ceiling at 1.1830 (July 1). If the pair clears the latter, it could then embark on a potential visit to the September 2021 high at 1.1909 (September 3), which comes just shy of the 1.2000 threshold.

Southwards, temporary support sits at the 100-day Simple Moving Average (SMA) at 1.1488, followed by the August trough at 1.1391 (August 1) and the May valley at 1.1210 (May 29).

Furthermore, momentum signals remain pale: the Relative Strength Index (RSI) has slipped to nearly 51, pointing to some gains ahead, while the Average Directional Index (ADX) below 11 suggests a directionless trend.

Outlook: Dollar keeps the edge

EUR/USD is expected to maintain its range-bound theme for the time being. The next clear driver may come from any shift from the Fed or a fresh change of heart in trade headlines. Until then, the dynamics around the Greenback look set to retain the upper hand.

Fundamental Overview

The Euro (EUR) came under renewed pressure at the beginning of the week, with EUR/USD sliding toward the 1.1650 zone as the US Dollar (USD) staged a marked rebound pari passu with investors’ assessment of Friday’s dovish comments from Chief Jerome Powell at the Jackson Hole Symposium.

Trade tensions cool, but tariffs still bite

Washington and Beijing extended their truce by 90 days in the past, narrowly avoiding fresh tariffs. Indeed, President Trump delayed the hikes until November 10, while China pledged reciprocal steps. Still, tariffs remain steep: 30% on Chinese exports to the US and 10% on US goods heading the other way.

The US and EU also reached a compromise. Washington slapped a 15% tariff on most European imports, while Brussels pledged to remove duties on US industrial goods and give greater access to American farm and seafood products. The US promised to cut its 27.5% tariff on European cars, but only once the EU enacts the needed legislation.

Central banks cautious on the outlook

The Federal Reserve (Fed) kept rates unchanged at its last meeting. Powell’s balanced message contrasted with dovish calls from Governors Christopher Waller and Michelle Bowman, who pushed for cuts but failed to sway the rest of the committee. Policymakers flagged "tough choices" if inflation proved sticky while the labour market weakened.

Still around the Fed and back to Wyoming, Powell left the door open to an interest rate cut as soon as next month’s policy meeting, warning that risks to the job market are increasing even as inflation remains a concern. He also stressed that no decision has been made, putting heavy emphasis on the next set of data. The August NFP report, due September 5, and inflation readings the following week are now seen as critical for shaping the Fed’s path.

At the European Central Bank (ECB), President Christine Lagarde described eurozone growth as “solid, if a little better.” Still, markets expect no rate cut until spring 2026.

Speculative appetite cools

Euro positioning showed a clear shift last week. Speculative long bets climbed to a three-week high near 118.7K contracts, while institutional players pared back their shorts to a two-week low around 166.4K. in addition, open interest also firmed for a second week in a row, edging up toward 825.2K contracts.