EUR/USD Analysis – 4 September 2025
Original Analysis by: Crispus Nyaga, DailyForex.com
The EUR/USD pair experienced slight bullish momentum around the beginning of September 2025, trading primarily above the 1.0880 level after staging a modest recovery from earlier losses. The pair’s trajectory is being influenced by several key economic indicators and market sentiment related to both the U.S. dollar and the eurozone economy. As traders continue to assess global economic conditions, the EUR/USD remains exposed to macroeconomic data, central bank guidance, and overall risk appetite in the markets.
Market Overview
EUR/USD has faced significant fluctuations over the past few months, mostly aligned with central bank policies and diverging economic growth patterns between the United States and the eurozone. As of September 4th, 2025, the pair hovered near a critical resistance level, with bullish attempts facing selling pressure near the 1.0930 zone. The slight rebound in EUR/USD can be partly attributed to weakened dollar demand, driven by recent soft U.S. data and uncertainty over the Federal Reserve’s near-term monetary policy outlook.
Key Market Drivers:
1. Weak U.S. Economic Data:
– Recent reports from the United States indicate slowing economic activity, particularly in the services and manufacturing sectors.
– Non-Farm Payrolls (NFP) data missed expectations in the previous week, raising concerns about labor market strength.
– Retail sales and consumer confidence showed signs of softness, undermining the previously aggressive dollar rally.
2. Fed Rate Outlook:
– While the Federal Reserve previously maintained a hawkish stance, market participants now anticipate a potential pause in interest rate hikes.
– Fed Chair Jerome Powell’s comments during the recent Jackson Hole symposium highlighted data dependency and a cautious approach to tightening.
– Interest rate futures suggest rising market sentiment that the Fed could adopt a more dovish bias by the end of 2025 if economic conditions warrant.
3. Eurozone Fundamentals:
– The euro remains under pressure due to uneven economic recovery across the EU bloc.
– Germany, the eurozone’s largest economy, posted weaker-than-expected GDP growth and a decline in industrial production.
– Inflation data from the eurozone showed some moderation, potentially supporting the European Central Bank’s (ECB) decision to hold or limit further rate hikes.
4. ECB Policy Expectations:
– Recent comments from ECB officials suggest a willingness to monitor incoming data, with no immediate urgency for further policy tightening.
– Traders are increasingly pricing in the possibility of a longer pause or endpoint in the ECB’s hiking cycle.
Technical Analysis of EUR/USD
In the technical landscape, EUR/USD has shown signs of forming a potential base following a previous downward trend. The price bounced back above the short-term support zone around 1.0800 and is attempting to hold gains on the way toward resistance near the psychological 1.0930 level.
Key Technical Levels:
– Support Levels:
– 1.0840: Minor support visible on the 4-hour chart and point of previous consolidation.
– 1.0800: Strong psychological level and historically watched by traders.
– 1.0765: August’s low and a major technical floor if bearish pressure resumes.
– Resistance Levels:
– 1.0885: Immediate resistance; nearing the 50-day moving average.
– 1.0930: Confluent resistance near past highs; a sustained breakout could invite more bullish momentum.
– 1.1000: Psychological round figure; key level for trend reversal confirmation.
– Chart Patterns:
– Price has been oscillating within a mild bullish channel since the late August lows.
– RSI (Relative Strength Index) is hovering near neutral, currently around the 50 mark, indicating a lack of strong bullish or bearish momentum.
– MACD (Moving Average Convergence Divergence) suggests weak upside momentum; histogram is bullish but tapering
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