Title: EUR/USD Forecast – September 1, 2025
Author: Christopher Lewis | Source: DailyForex.com
Original Article: https://www.dailyforex.com/forex-technical-analysis/2025/09/eurusd-forecast-1-september-2025/233420
Overview
The EUR/USD pair began the September trading session with bearish momentum, retreating from recent highs as it struggles to reclaim upside traction. After experiencing a significant rally throughout much of the summer, the euro is showing signs of fatigue against the US dollar. With traders remaining cautious in anticipation of upcoming macroeconomic data and central bank direction, the short-term outlook points to increased volatility and key testing levels on the chart.
In this extended technical review, we take a deep dive into the recent price action, examine major resistance and support levels, analyze the impact of central bank policies, and discuss potential trading strategies for market participants. The focus is on interpreting the broader context that may shape the direction of the EUR/USD in the days and weeks to come.
Price Action Summary
During the past several trading sessions, EUR/USD has oscillated within a broad consolidation zone, showing signs of exhaustion near previous resistance levels. Despite a relatively bullish undertone over the medium term, short-term charts suggest a pullback was inevitable after the minor rally stalled late last week.
Key Observations:
– The pair dropped during the trading session on August 31, showing continued weakness carried forward into September.
– Price action currently hovers around the 1.0800 area, a psychologically important zone that could either serve as a springboard or break lower.
– Momentum indicators suggest that bulls are losing control, implying that additional downward pressure may emerge.
Technical Analysis
Trend and candlestick formations align with a cautious short-term bearish bias. Price failed to overcome recent highs near 1.0930, sparking a retracement towards support. Interested traders should watch the following technical features closely:
– The 50-Day Exponential Moving Average (EMA), currently around 1.0815, continues to act as dynamic resistance after being breached last week.
– The 200-Day EMA, situated below current price levels around 1.0750, remains an essential long-term support marker.
– A shooting star candle formation on the daily chart near the highs last week may be a sign of a weakening rally and potential bearish reversal.
Support and resistance levels to monitor:
Immediate Resistance:
– 1.0850: Near-term ceiling that capped momentum last week.
– 1.0930: The recent swing high, a major resistance threshold that halted bullish attempts.
– 1.1000: Major psychological and technical resistance, aligning with mid-June price action.
Immediate Support:
– 1.0800: Current pivot zone. A close below this could initiate further downside.
– 1.0750: Near the 200-Day EMA, serving as a make-or-break area for medium-term bulls.
– 1.0700: A critical level where buyers may look to re-enter, especially if risk sentiment improves.
Macro Drivers
The EUR/USD pair remains heavily influenced by diverging central bank signals, inflation data, and broader geopolitical risk sentiment. Eurozone economic fundamentals appear fragile as policymakers grapple with slowing growth, while the US maintains reasonably solid payroll and inflation figures.
Factors driving EUR/USD action:
European Central Bank (ECB) Policy Outlook:
– The ECB remains cautious, maintaining a data-dependent approach.
– Inflation has declined from peak levels but remains above the ECB’s long-term target.
– Markets remain skeptical about the ECB’s ability to hike further given weak underlying economic data.
Federal Reserve Positioning:
– The Fed has maintained a hawkish stance, driven by a robust labor market and lingering inflation pressures.
– Market participants are pricing in potential rate stability for the coming quarters, but FOMC commentary remains non-committal.
– Tight US monetary policy continues to support the dollar in the near term.
Read more on EUR/USD trading.