EUR/USD Forecast – September 2, 2025
(Adapted from and credit to: Christopher Lewis, DailyForex.com)
The EUR/USD currency pair experienced notable fluctuations during Tuesday’s trading session, with the 1.0850 level proving to be a strong area of resistance. Throughout the day, the currency pair showed efforts to break above that level but consistently fell short. At the center of these price movements is continued uncertainty across global economic conditions, driving both speculative positioning and short-term volatility.
Traders remain watchful of macroeconomic indicators and central bank policy decisions—particularly those from the European Central Bank (ECB) and the U.S. Federal Reserve. For the near term, EUR/USD appears range-bound but remains prone to breakout scenarios depending on shifts in economic tone, inflation data, and interest rate expectations.
EUR/USD Technical Overview
Price action for EUR/USD continues to consolidate in a tight range, hinting at an eventual breakout. The market is at a crossroads, with strong technical indicators suggesting both bullish and bearish opportunities ahead.
Key technical insights include:
– Repeated rejection at the 1.0850 resistance level
– Previous minor support at 1.0750 continues to offer buying interest
– The 50-day Exponential Moving Average (EMA) hovers slightly above price, creating additional resistance
– Longer-term 200-day EMA trending higher beneath current price action, offering support in case of a pullback
With these dynamics in place, traders should be cautious of sharp moves triggered by unexpected economic releases or central bank guidance.
Key Support and Resistance Levels
To understand EUR/USD trajectory, traders must closely monitor support and resistance levels, which determine institutional interest:
Important levels to watch include:
– Resistance:
– 1.0850: A tested level of resistance where price has failed multiple times
– 1.0900: A psychological level that could accelerate bullish momentum if breached
– 1.1000: A round number and longer-term resistance offering redemption for euro bulls
– Support:
– 1.0750: Recent consolidation zone acting as near-term cushion
– 1.0700: A round number potentially drawing interest from medium-volume buyers
– 1.0600: A vital structural level from previous months that may attract dip buyers
At the current trajectory, a sustained move above 1.0850 could pave the way for further gains toward 1.0900, possibly even 1.1000. However, failure to retain ground above 1.0750 may expose the pair to losses and push price action toward deeper support zones.
The Role of Central Banks
The market pulse for EUR/USD is closely tied to central bank policy divergence. The European Central Bank has been more cautious about tightening, focusing on cooling inflation while grappling with sluggish eurozone growth. In contrast, the U.S. Federal Reserve has taken a more aggressive tightening path over the past year, although signs of pause have recently emerged.
ECB’s current stance:
– Recent macroeconomic reports show persistent but reducing inflation in the euro bloc
– ECB officials are contemplating holding interest rates steady to assess past tightening effects
– Weak demand and risk of recession remain concerns for eurozone policymakers
Federal Reserve’s current outlook:
– U.S. data demonstrates resilient labor markets and signs of sticky inflation
– Although the Fed signaled intentions to pause further rate hikes, it leaves room open for another raise if inflation proves stubborn
– The “higher for longer” narrative is gaining acceptance among traders
The divergence in policy approach continues to create mixed signals for the EUR/USD pair. As long as the Fed maintains an upper hand in terms of real rates, the U.S. dollar could retain some strength, putting pressure on the euro.
Market Sentiment and Positioning
Investor sentiment surrounding the euro and the dollar also plays a vital role. According to recent positioning data from the Commodity Futures Trading Commission (CFTC), market participants
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