EUR/USD Technical Analysis – 4 August 2025
By: Mahmoud Abdallah, as originally published on DailyForex.com
Overview
The EUR/USD pair has experienced a relatively stable trading pattern over the recent sessions, following the price behavior observed in July 2025. The currency pair has maintained a sideways trajectory within a tight range, with an upper limit close to 1.0925 and a lower support around 1.0876. This consistent movement reflects a period of consolidation as traders await clear economic signals from both the Eurozone and the United States that could provide direction for future trends.
Market sentiment appears neutral at this point. Investors and traders are exercising caution amid global economic uncertainty, central bank policy expectations, and upcoming economic data releases. The pair’s performance in early August has been largely influenced by varying expectations surrounding interest rate cuts from the European Central Bank (ECB) and the U.S. Federal Reserve.
Key Technical Indicators
– The EUR/USD continues to trade within a narrow horizontal channel, showing the hallmarks of a consolidation pattern.
– The 50-day simple moving average (SMA) is currently serving as a dynamic resistance, adding weight to the upper boundary of the current consolidation zone.
– On the downside, the pair is finding support near the 1.0876 area, which has worked as a floor multiple times in previous sessions.
– Momentum indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are reflecting a lack of directional strength, with both indicators hovering near neutral territory.
– The RSI remains around 50, indicating that neither buyers nor sellers have control of the market direction.
– The MACD line is trending close to the signal line, lacking any significant divergence which might suggest a new trend.
Price Action and Support/Resistance Levels
The price movement in the pair has shown reluctance to decisively break in either direction, reflecting the overall market indecisiveness.
Important resistance levels:
– 1.0925: Represents the top of the current range and a key level to monitor for a potential bullish breakout.
– 1.0960: Marked by previous highs established over the last month, this level may pose an obstacle should the pair attempt further advancement.
– 1.1000: A psychological resistance level and a longer-term barrier that, if broken, could mark the start of a more sustained rally in the euro.
Critical support levels:
– 1.0876: A significant near-term support that has held strong through multiple sessions.
– 1.0840: Below this, downside risks increase as older demand zones are tested.
– 1.0800: A critical psychological level; a break below would indicate a stronger bearish sentiment and could lead to a retest of the June 2025 lows.
Analysis of Fundamental Drivers
Much of the pair’s stagnation has been driven by a lack of definitive momentum in fundamentals from both the Eurozone and the United States. However, certain fundamental factors remain central to the current dynamics:
European Central Bank outlook:
– Market participants are skeptical over whether the ECB will proceed with additional rate cuts later this year.
– Recent rhetoric from ECB officials hints at a “data-dependent” policy outlook, reducing the odds of aggressive monetary easing.
– Inflation pressures within the Eurozone have cooled but not to a degree that would warrant an immediate stimulative policy shift.
Federal Reserve stance:
– U.S. economic indicators released in July have been mixed, allowing the Federal Reserve to maintain a cautious policy tone.
– Core Personal Consumption Expenditures (PCE) inflation proved slightly higher than expectations, which dampened speculation that the Fed would cut rates any time soon.
– Continued labor market resilience, coupled with higher wage growth data, further supports the argument against early rate cuts.
– Overall, the belief that the Federal Reserve will hold rates steady or ease only lightly in Q4 2025 has lent modest strength to the dollar.
Global risk
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