Currently, the EUR/USD chart indicates a significant strengthening of the euro against the US dollar. The pair has surpassed the 1.1670 level, up from the range of 1.1400 seen at the start of August.
Factors Behind the EUR/USD Rally
The recent decline in the US dollar is attributed to various factors, as reported by Reuters:
→ Anticipation of a potential interest rate cut by the Federal Reserve, particularly following the disappointing US labor market data last week.
→ Investor focus on the upcoming US inflation report scheduled for 12 August at 15:30 GMT+3, which could impact future monetary policies.
Simultaneously, the euro is gaining strength due to increased optimism regarding a potential resolution to the conflict in Ukraine. There is also hope for a potential meeting between US President Donald Trump and Russian President Vladimir Putin, which might alleviate geopolitical tensions.
Technical Analysis of the EUR/USD Chart
On 30 July, predictions suggested a potential recovery for EUR/USD after hitting its low in July — a recovery that has since materialized. However, is there clear bullish momentum in the pair now?
Not entirely. The existence of lower highs and lower lows (A-B-C-D) indicates uncertainty about a solid bullish trend, hinting at an ongoing bearish market structure.
Moreover, the descending channel on the EUR/USD chart has become more defined. Following a brief consolidation near the channel’s median line (highlighted with a circle), the price has moved towards the upper boundary. It’s worth noting that this region previously triggered a sharp decline (indicated by an arrow) that breached the blue support line.
Considering these factors, it is conceivable that sellers may become more active around current price levels. This could potentially stall or reverse the recent upward movement, particularly if bearish momentum strengthens.
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