EUR/USD Analysis – August 18, 2025
Original analysis by: Mahmoud Abdallah, DailyForex
The recent performance of the EUR/USD currency pair illustrates how investor sentiment is shifting as global monetary policy expectations evolve. The pair remains under persistent bearish pressure, trading near its lowest levels in over a month. A combination of strong U.S. economic data and cautious European outlooks continues to weigh on the euro while bolstering the dollar.
This article breaks down the key drivers of the current EUR/USD movement, technical considerations, and what traders should look for in coming sessions.
U.S. Dollar Strength Driven by Economic Resilience
– The U.S. dollar remains broadly supported by recent robust economic data.
– Retail sales, industrial output, and labor market figures have generally come in above expectations.
– Inflationary pressures appear sticky enough to keep the Federal Reserve cautious about premature rate cuts.
Investors are now pricing in the possibility of interest rates remaining higher for longer. This sentiment is supported by comments from several Federal Reserve officials signaling reluctance to ease policy without clear signs of reduced inflationary pressure. Their stance has revived demand for the dollar, exerting downward pressure on the euro.
European Economic Concerns
– On the other hand, the euro has been weakened by soft data out of the eurozone.
– Recent GDP figures have been underwhelming, with growth stagnating in key areas like Germany and France.
– Inflation has started to cool, but without a corresponding rebound in economic activity, this has fueled concerns about stagflation.
– The European Central Bank (ECB) has also adopted a more cautious approach.
ECB officials have expressed worry over the economic slowdown, suggesting that further policy tightening may not be forthcoming unless inflation starts trending upward again. The contrast between central bank expectations in Europe and the U.S. is causing a widening divergence in interest rate forecasts, contributing to the ongoing bearish pressure on EUR/USD.
Technical Analysis of EUR/USD
The technical outlook for the EUR/USD pair reflects the current bearish trend, with recent sessions showing consistent selling pressure. Here are some technical insights based on the latest price action:
– The pair is trading below key moving averages, signaling a confirmed downtrend.
– The 50-day moving average recently crossed below the 100-day average, reinforcing near-term negative bias.
– RSI (Relative Strength Index) hovers below the 50 line, reflecting lack of bullish momentum.
– MACD (Moving Average Convergence Divergence) remains in negative territory, supporting bearish conditions.
Key Support Levels
– 1.0850 – A recent low tested twice in the past week. A break below could signal additional downward movement.
– 1.0800 – Psychological level and prior support zone. Traders may watch this level for potential short-term rebounds.
– 1.0725 – August lows, a deeper support level that, if breached, may open the door for further downside toward 1.0650.
Key Resistance Levels
– 1.0960 – A previously failed resistance area. Its rejection in recent attempts shows strong selling pressure above this mark.
– 1.1000 – Psychological round number and a level that coincides with the 50-day moving average.
– 1.1045 – Where the 100-day MA currently resides. Overcoming this level could shift near-term sentiment.
Short-term Outlook
Unless the pair is able to break through key resistance zones, particularly the 1.1000 level, the bearish outlook remains intact. The euro will need support from positive data or hawkish comments from ECB officials to reverse its current trajectory.
Current Trend Overview
– Trend Direction: Bearish
– Momentum: Weakening ahead of the key support zone
– Volatility: Elevated due to broader market uncertainty and upcoming economic releases
– Bias: Sell rallies while below major resistance levels
Fundamental Influences to Watch
In the days to come
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