EUR/USD Holds Steady Ahead of Key U.S. Inflation Data and Geopolitical Developments
As financial markets brace for the release of the latest U.S. inflation figures—set for 3:30 PM Egypt time today—the EUR/USD currency pair remains relatively stable, hovering near the 1.1600 level. This period of market neutrality may soon shift, as the incoming data has the potential to apply downward pressure on the euro against the U.S. dollar. Leading trading platforms report that the pair has seen minimal volatility in recent sessions, holding firm around this psychological threshold.
This stability comes as markets enter mid-August, with the euro still trading just below its highs recorded last month in 2021. Investors and traders are actively evaluating a range of economic, geopolitical, and monetary policy factors that could influence future price action in the forex market. Currency analysts continue to monitor key indicators and sentiment, awaiting catalysts that could break the current stalemate.
EUR/USD determining factor
A notable geopolitical event drawing investor attention is the upcoming Friday meeting between U.S. President Donald Trump and Russian President Vladimir Putin. The summit is expected to focus on finding diplomatic solutions to the ongoing conflict in Ukraine. However, Ukrainian President Volodymyr Zelensky is not anticipated to attend the talks. Should the meeting lead to meaningful progress or a potential resolution, the euro could receive a significant boost against major currencies. Conversely, a lack of tangible outcomes could dampen market sentiment and stall any bullish momentum in EUR/USD trading.
On the monetary policy front, expectations of an imminent interest rate cut by the Federal Reserve have intensified. This comes in the wake of disappointing U.S. jobs data and a weaker-than-expected ISM Services PMI report, both of which have cast doubt on the strength of the American economy. In contrast, the European Central Bank (ECB) concluded its current easing cycle in July after implementing eight rate cuts over the past year. These adjustments brought borrowing costs down to their lowest levels since November 2022. Despite this, there remains speculation among some traders that the ECB may consider another rate cut before the year concludes, depending on evolving economic conditions.
Economically, the eurozone saw modest growth in the second quarter of the year, with GDP expanding by just 0.1%. Inflation remained steady at 2% in July. However, downside risks persist. A major concern is the 15% tariff the United States continues to impose on a broad range of European exports, which could negatively impact eurozone trade and economic performance moving forward.
EUR/USD Technical Outlook – Bearish Scenario
From a technical analysis standpoint, the EUR/USD pair may face increased bearish momentum if sellers push the price downward toward the next support zones at 1.1530 and 1.1400, respectively. A move to these levels could trigger strong selling pressure, potentially leading technical indicators into oversold territory. At present, the 14-day Relative Strength Index (RSI) is hovering around 50, indicating a neutral market stance. Similarly, the Moving Average Convergence Divergence (MACD) indicator shows signs of turning lower, further suggesting a potential bearish tilt.
EUR/USD Technical Outlook – Bullish Scenario
On the other hand, should market sentiment shift favorably—especially following the release of the U.S. inflation data or any encouraging geopolitical developments—the euro could aim for the key psychological resistance level at 1.1800. A decisive break above this threshold would signal renewed bullish momentum and likely reinforce investor confidence in the euro. For now, forex experts recommend adopting a cautious approach, closely watching how markets react to today’s U.S. inflation numbers and Friday’s high-level meeting between Trump and Putin before making any significant trading decisions.
Looking ahead, the policies adopted by the Federal Reserve and the broader U.S. administration will continue to play a critical role in shaping market direction in the short term. Additionally, attention will be directed toward the potential nomination of a new Federal Reserve chair—a development that could influence monetary policy expectations. On the European side, financial markets remain attentive to the ongoing negotiations surrounding a possible U.S.-EU trade agreement, which could also impact the strength of the euro in the coming months.
