**EUR/USD Forecast Update – August 22, 2025**
*By Economies.com*
The EUR/USD currency pair showed a notable shift in momentum during early trading, with the pair posting slight gains after testing support levels. Despite recent bearish pressure, the euro managed to reclaim partial traction against the US dollar, signaling a potential pause or reversal in the pair’s downward trend. However, technical indicators and fundamental influences suggest that the broader direction remains cautious.
This updated forecast will explore the recent price activity of EUR/USD, identify relevant technical levels, and highlight the economic indicators shaping market sentiment. The analysis is based on data available as of Friday, August 22, 2025, and is credited to Economies.com.
Overview of Recent Price Action:
– EUR/USD approached light support levels near 1.0820, where buyers initiated modest interest.
– The currency pair recovered above 1.0850 during European trading hours on August 22, suggesting a temporary halt to the prior bearish leg.
– The euro’s brief upward bounce follows stronger-than-expected European economic data and weakening sentiment toward the US dollar.
– Momentum indicators remain mixed on daily charts, posing challenges to determining a clear short-term bias.
Technical Analysis:
From a technical analysis perspective, the EUR/USD daily chart reveals several key elements:
– The pair held above the 61.8 percent Fibonacci retracement at 1.0820, referencing the rally from 1.0725 to 1.1010.
– Price action remains below the 50-day Simple Moving Average (SMA), currently positioned around 1.0925.
– The Relative Strength Index (RSI) is hovering close to 45, showing weak bullish momentum but not in oversold territory.
– The MACD (Moving Average Convergence Divergence) signal line remains below the histogram baseline but shows signs of flattening, which may indicate an upcoming convergence or bullish crossover should momentum shift.
Key Support and Resistance Levels:
Traders and analysts often focus on specific levels to determine risk-to-reward conditions and potential reversal zones. As of August 22, the following levels are considered instrumental for the near-term projections of EUR/USD.
Support Levels:
– 1.0820: Immediate support formed by the Fib retracement and prior price action.
– 1.0780: Previous daily low and psychological threshold of buyer interest.
– 1.0725: A crucial medium-term support that marked the swing low from early July 2025.
Resistance Levels:
– 1.0885: The near-term ceiling tested during the midweek session. Bulls could find it challenging to break through this barrier without strong fundamentals.
– 1.0925: The 50-day SMA, a dynamic indicator of medium-term momentum.
– 1.1010: The high from early August and a significant resistance area standing over 190 pips from current levels.
Fundamental Influences:
The movement in EUR/USD is not solely shaped by technicals. A combination of macroeconomic variables, monetary policy divergence, and investor sentiment plays an essential role. Recent events from both the Eurozone and the United States have impacted the trajectory of the euro-dollar exchange rate.
Eurozone Factors:
– August PMI composite data came in above forecast, particularly in Germany and France, which has rekindled optimism about Eurozone growth.
– Consumer confidence in the bloc showed mild improvement for the second consecutive month, hinting at greater household spending in Q4 2025.
– The European Central Bank (ECB) maintained its key interest rate at 4.25 percent and reaffirmed its “data-dependent” approach, cooling hawkish expectations.
– ECB officials have restated their intent to monitor inflation progress before committing to monetary tightening or easing decisions.
United States Factors:
– US jobless claims rose more than expected in the week ending August 17, fueling speculation that the labor market could be softening.
– August Flash Manufacturing and Services PMI disappointed estimates
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