EUR/USD Forecast: Rallies but Stalls – 29 August 2025

-- The euro rallied a bit during the trading session on Thursday as we continued to see a lot of back and forth noise.
-- All things being equal, this is a market that seems to be stuck in a range, which is interesting considering that “everybody knows” that the Federal Reserve is going to be cutting interest rates in September.
-- This should, in theory, be very negative for the US dollar. However, that’s not what we are seeing overall.
-- In fact, it seems that there is a lot of confusion at the moment, and I think this might be a clue as to what happens over the longer term.

Technical Analysis

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The technical Analysis for this market is very flat over the last couple weeks, despite the fact that last Wednesday we had seen a lot of bullish pressure after Jerome Powell finally admitted that the Federal Reserve was at least considering cutting rates. It was the first time he sounded even remotely dovish in the last couple of years, and therefore I think a lot of traders got way ahead of themselves. Certainly, since we have seen that statement come out, the market has essentially gone nowhere. The 50 Day EMA sits right around the 1.16 level underneath and is rising. This is technically a support level, but we are also somewhat flat as far as that EMA is concerned, so it also shows that there isn’t a lot of momentum at the moment.

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The 1.18 level above is a significant resistance level that we had seen multiple times. The 1.18 level is an area that has been important, but it’s also I suspect at least a target for bullish traders. If we can break above the 1.18 level, then it opens up the possibility of a move to the 1.20 level.

Hidden Hints?

I think the fact that the US dollar has not been eviscerated after that statement suggest that there might be some economic trouble ahead. I have seen this before, when the United States suddenly find itself in a rate cutting cycle, that is quite often close to the end of the selling of the US dollar. This is because if the US economy starts to fall, then you will see people running to safety, quite often in the form of the US Treasury market. That demands US dollars. Furthermore, it has an outside effect on several the other global economies, including Europe. While I am not ready to start shorting this pair quite yet, at least not for anything more than a short-term trade, I will be watching this.

If the market were to break down below the 1.1550 level, I think it opens up a move to the 1.14 level. If we break down below the 1.14 level, I anticipate that the bullish trend in the EUR/USD is over. I suspect that we could see a wicked reversal, although I’m not calling for it to happen in the short term. In the short term, I think we will continue to see a lot of back and forth consolidation still, especially as larger institutional traders are still away on vacation.

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