Original article by Ross J. Burland, ForexFactory
EUR/USD Forecast Today – August 16, 2025
The EUR/USD currency pair has continued its bearish trend, driven by a combination of economic factors from both the United States and the Eurozone. The U.S. dollar remains supported by expectations of prolonged high interest rates from the Federal Reserve, while the euro is under pressure due to weakening economic indicators from key European economies. This dynamic has played a critical role in shaping investor sentiment and driving price movement in the foreign exchange market.
Below is a detailed analysis of the EUR/USD outlook, incorporating technical, fundamental, and sentiment perspectives. This article delves into recent developments, key support and resistance levels, and projected trading scenarios for the short term.
Current Market Overview
– EUR/USD dropped to its lowest level in several weeks during early morning trading.
– The overall trend remains bearish amid continued U.S. dollar strength.
– The pair is trading firmly below major moving averages, reinforcing the downtrend.
– Market participants are cautious ahead of key economic releases, including Eurozone GDP and inflation data.
Fundamental Factors Impacting EUR/USD
Several developments on the macroeconomic front have steered the EUR/USD pair lower. Investors are digesting contrasting signals from both economies, leading to divergent monetary policy expectations.
1. US Economic Strength
– Robust employment data: Recent labor market indicators such as non-farm payrolls and jobless claims have shown continued resilience in the U.S labor market. Employment strength supports higher consumer spending and economic growth.
– CPI inflation figures: U.S. consumer price inflation remains elevated, prompting expectations that the Federal Reserve will maintain a restrictive monetary policy stance.
– Fed commentary: Members of the Federal Reserve have reiterated their commitment to the 2 percent inflation target, suggesting high interest rates could remain in place longer than previously expected.
– Treasury yields: Yield differentials have widened as U.S. Treasury yields climb, making the dollar more attractive relative to the euro.
2. Eurozone Weakness
– Sluggish economic activity: Recent Eurozone PMI data point to contraction in manufacturing and waning momentum in the services sector.
– German economic slowdown: Germany, the largest economy in the Euro area, continues to show signs of stagnation, weighed down by high energy costs and weak industrial output.
– ECB policy outlook: The European Central Bank has signaled that it may be nearing the end of its rate-hiking cycle due to weakening economic growth and easing inflation pressures. This policy divergence with the Fed has fueled euro selling.
– Inflation trends: While inflation in the Eurozone is gradually moderating, it is not accelerating enough to warrant further ECB tightening.
Technical Analysis
Technical indicators show that the EUR/USD pair remains under pressure with no immediate signs of a reversal in the near term. Price action is guided by prevailing bearish sentiment and the broader risk-off tone in the markets.
1. Price Structure
– Recent lows: EUR/USD declined below key psychological support at 1.0900 and is now approaching the next major support zone around 1.0830.
– Bearish trend line: A multi-week downtrend line has continued to cap upside attempts, limiting recovery rallies.
– Lower highs and lower lows: The repeated formation of lower highs and lows confirms the continuation of the bearish trend.
2. Key Support and Resistance Levels
Support:
– 1.0830: Previous swing low and key pivot level.
– 1.0785: March 2023 low, providing medium-term horizontal support.
– 1.0720: A Fibonacci retracement level and psychological barrier.
Resistance:
– 1.0900: Previous support now turned resistance.
– 1.0950: Mid-August high.
– 1.1000: Round number and moving average convergence zone.
3. Moving Averages
– 50-day moving average (MA): Currently near 1.0950 and declining, reinforcing bearish momentum.
– 100-day MA
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