EUR/USD Forex Analysis – August 5, 2025
By: DailyForex.com Technical Analysis Team (Original article by: Mahmoud Abdallah)
The EUR/USD pair continues to be under pressure amid ongoing concerns surrounding economic growth in the Eurozone and expectations for prolonged interest rate divergence between the European Central Bank (ECB) and the U.S. Federal Reserve. On August 5, 2025, the pair maintained a bearish posture, trading near the 1.0800 level, as investors responded to recent economic data releases and central bank commentary.
Below is a detailed overview of the recent developments and technical outlook for EUR/USD.
Market Fundamentals Driving EUR/USD
Several macroeconomic and monetary policy factors are converging to influence the EUR/USD exchange rate at the start of August 2025.
Key factors include:
• Divergence in central bank policy:
– The Federal Reserve has maintained a hawkish tone, signaling a willingness to keep interest rates elevated for an extended period.
– In contrast, the ECB faces increasing pressure to cut rates amid mounting signs of a slowdown in the Eurozone economy.
• Recent European economic data:
– The Eurozone continues to experience sluggish growth, with manufacturing and services sectors showing contraction in July PMIs.
– Inflation in the region has softened, granting the ECB more room to consider policy easing.
• U.S. data supporting stronger dollar:
– Robust employment data and inflation figures from the U.S. have reinforced the Federal Reserve’s position.
– The dollar’s strength has remained intact, as reflected in the U.S. Dollar Index (DXY) hovering above the 103.00 mark.
• Geopolitical uncertainty:
– Ongoing tensions in Eastern Europe and energy-related risks continue to weigh on EUR sentiment.
– Investors are also reacting to the broader risk-off sentiment that boosts safe-haven currencies like the U.S. dollar.
Technical Outlook for EUR/USD
As of August 5, 2025, the EUR/USD currency pair is entrenched in a short-term downtrend, with key technical indicators showing bearish momentum.
Price action and technical levels:
• Current price:
– The pair is trading near 1.0805, having lost ground from the July highs above 1.1000.
• Key resistance levels:
– 1.0850: This level coincides with the 50-day moving average and previously served as a short-term support.
– 1.0900: A psychological threshold and the next resistance level, which also aligns with prior swing highs.
– 1.0950: Strong resistance area where sellers emerged in late July.
• Support levels:
– 1.0780: Current support level that has been tested multiple times over the past few sessions.
– 1.0725: Below this lies a major support region that has held previously during bearish selloffs.
– 1.0685: A critical long-term level; a break below could open a path to further downside.
Trend indicators:
• Moving averages:
– The pair remains below both its 50-day and 200-day moving averages, reinforcing the bearish trend.
– The 20-day moving average has turned downward, confirming short-term pressure.
• Relative Strength Index (RSI):
– RSI for the daily chart stands near 41. This suggests that the pair is not yet oversold, and further declines may be possible before a rebound.
• MACD (Moving Average Convergence Divergence):
– The MACD histogram has turned negative, and the signal line indicates growing downside momentum.
Candlestick patterns:
• The daily chart shows persistent bearish candles forming lower highs and lower lows.
• No significant bullish reversal patterns, such as a hammer or bullish engulf
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