EUR/USD Weekly Forecast: August 3 to August 8, 2025
Original Author: Christopher Lewis | Source: DailyForex.com
The EUR/USD currency pair ended the first week of August 2025 showing increased volatility as traders weighed divergent economic data from the Eurozone and the United States. The pair experienced a range-bound movement influenced by mixed indicators, primarily driven by fundamental news and evolving expectations on central bank policies. As we step into the trading week of August 3rd to 8th, 2025, several key themes continue to influence the direction of this major currency pair.
Overview of Last Week’s Movement
– EUR/USD had difficulty breaking beyond key technical resistance levels, lingering around the 1.0920 region.
– The week closed slightly bullish, indicating some underlying demand for the euro despite headwinds.
– The U.S. Non-Farm Payroll (NFP) report surprised to the downside, which offered some lift to the euro late in the week.
– Mixed PMI data and Fed rhetoric added to the pair’s short-term range-bound behavior.
Current Sentiment and Market Dynamics
Direction for EUR/USD continues to be influenced heavily by macroeconomic data and central bank signals. With the ongoing tug-of-war between a dovish Federal Reserve and a cautious European Central Bank (ECB), clarity regarding future interest rate moves remains unclear. Traders are looking for firm guidance from Fed speakers and ECB policymakers to determine longer-term trends for the pair.
Key Sentiment Drivers:
– Mixed U.S. economic releases have fed speculation regarding a potential Fed pause or rate cut before year-end.
– Eurozone inflation data remains near ECB’s target, giving the central bank reason to maintain current policy while staying vigilant.
– Political developments, particularly within the EU, continue to pose intermittent risks to euro stability.
Technical Analysis
Price Behavior Highlights:
– The EUR/USD pair closed last week around the 1.0920 mark.
– The 1.0900 psychological level continues to provide support, reinforced by the rising trendline support observed on the H4 chart.
– Resistance remains at the 1.0960 and 1.1000 levels, both of which have been tested and rejected in previous attempts.
Support and Resistance Levels:
Support:
– 1.0900 – Key psychological support and uptrend line convergence point.
– 1.0860 – Secondary support from mid-July lows.
– 1.0800 – Strong historical support level and low-traffic area.
Resistance:
– 1.0960 – Immediate resistance tested twice over the last two weeks.
– 1.1000 – Major psychological barrier as well as a previously rejected breakout point.
– 1.1050 – Fib extension level and past pivot area.
Key Technical Indicators:
– Moving Averages:
– The 50-day EMA hovers near 1.0905 and is now serving as dynamic support.
– The 200-day EMA near 1.0830 suggests a major support zone, valid for medium-term trend following.
– Relative Strength Index (RSI):
– RSI on the daily chart remains neutral at 52, indicating no immediate overbought or oversold conditions.
– MACD:
– The MACD line is slightly above the signal line, suggesting a mild bullish bias.
Price Pattern Development:
– A potential bullish continuation flag has formed on the daily chart. Should price break above the 1.0960 resistance, this pattern could confirm a move towards the 1.1000 mark.
– A loss of the 1.0900 support would likely invalidate the bullish scenario and open the door for sharper declines.
Fundamental Drivers to Watch
This upcoming week, several macroeconomic releases and central bank commentaries will shape trader sentiment on EUR/USD.
Economic Indicators to Monitor:
Eurozone:
– Retail Sales (YoY) – August 5, 2025
– German Industrial Production – August 6, 2025
–
Read more on EUR/USD trading.