- EUR/USD climbed to three-day highs, shifted its focus to the 1.1700 barrier.
- The US Dollar maintained its dovish bias, easing to three-day lows.
- Another revision of the US Q2 GDP data surprised to the upside.
The Euro (EUR) extended its recovery on Thursday, with EUR/USD pushing closer to the 1.1700 level and marking fresh three-day highs.
The move came as the US Dollar (USD) slipped, with the US Dollar Index (DXY) breaking below 98.00 to multi-day lows. Traders leaned into Fed rate-cut bets while political noise around Trump’s clashes with the Federal Reserve (Fed) kept the greenback under pressure.
Trade tensions cool, but tariffs still bite
Global trade jitters eased as Washington and Beijing agreed to extend their truce for 90 days. President Trump delayed tariff hikes until November 10, while China pledged reciprocal steps. Even so, tariffs remain steep at 30% on Chinese goods entering the US and 10% on US goods heading the other way.
Meanwhile, the US and EU reached a deal: Washington imposed a 15% tariff on most European imports, while Brussels scrapped duties on US industrial goods and expanded access for American farm and seafood exports. A cut in US tariffs on European cars could follow, pending new EU legislation.
French politics back in focus
In Europe, attention is turning to France, where Prime Minister François Bayrou faces a September 8 confidence vote over his budget plan. With opposition parties, from National Rally to the Greens and Socialists, refusing support, his minority government looks shaky. A defeat could force President Emmanuel Macron to appoint a new prime minister, keep Bayrou on as caretaker, or even call snap elections.
Fed: All about the data
The Federal Reserve held rates steady at its last meeting, with Chair Jerome Powell striking a balanced note. He flagged risks to the labour market but stressed inflation hasn’t yet returned to target, leaving the door wide open for a cut as soon as September. Investors are now watching the August Nonfarm Payrolls (NFP) on September 5 and fresh inflation figures the following week to gauge the Fed’s next move.
ECB: Playing it calm
The European Central Bank (ECB) has been more relaxed. President Christine Lagarde described eurozone growth as “solid, if a little better,” signalling no rush to cut. Markets expect the ECB to hold steady through 2025, with the first cut only seen in spring 2026.
Speculators expand bullish exposure
Commodity Futures Trading Commission (CFTC) data showed net long Euro positions rising to a three-week high at 118.7K contracts, while institutional shorts eased to a two-week low. Open interest climbed for a second week, pointing to stronger conviction in positioning.
Tech picture: EUR/USD still boxed in
EUR/USD is showing some momentum but remains stuck in consolidation. On the topside, resistance sits at the August high of 1.1742 (August 22). A break there would open the path to 1.1788 (July 24) and the 2025 ceiling at 1.1830 (July 1). A stronger push could even target the September 2021 top at 1.1909, just below the big 1.2000 level.
On the downside, first support is the 100-day Simple Moving Average (SMA) at 1.1502, followed by the August low at 1.1391 (August 1) and the weekly base at 1.1210 (May 29).
Momentum signals are mixed: the Relative Strength Index (RSI) is just above 50, pointing to mild upside bias, while the Average Directional Index (ADX) under 11 shows the trend is weak.
EUR/USD daily chart
Near-term view
For now, EUR/USD looks likely to stay in its 1.14–1.18 range. Breaking out will need a fresh catalyst — whether it’s new signals from the Fed or another twist on trade. Until then, the dollar will likely continue calling the shots.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region.
The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.
QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
