EUR/USD Forecast – September 3, 2025 Analysis
By: Christopher Lewis
Original article from DailyForex.com
The EUR/USD currency pair has recently experienced further downward pressure in early September 2025. Market sentiment is shifting towards a more risk-averse stance amid persistent economic uncertainty, varying interest rate expectations between the Federal Reserve and the European Central Bank (ECB), and fluctuating economic data releases. These factors continue to define the short-term trajectory of the currency pair as traders attempt to position themselves ahead of key events.
Overview of Current EUR/USD Movement
– The EUR/USD dipped below significant psychological and technical support levels during the final trading days of August and into early September.
– The prevailing bias remains bearish, with no clear sign of a reversal in the near term.
– Market participants remain focused on fundamental divergences between U.S. and Eurozone policies, contributing to dollar strength and euro weakness.
Key Technical Levels
As of September 3, 2025, the EUR/USD pair continues to test lower technical boundaries:
– Resistance Zones:
– 1.0800: This represents a critical short-term resistance level; a break above this area could open the door to more bullish momentum.
– 1.0850: This higher resistance zone matches the 50-day simple moving average, further reinforcing its importance.
– Support Levels:
– 1.0725: This is the most immediate area of support and is under siege from bearish momentum.
– 1.0700: A drop below this level might signal stronger downside continuation.
– 1.0650 and below: Represent longer-term support levels that could be tested if current bearish trends continue.
Trend Analysis and Technical Indicators
– The EUR/USD has remained in a bearish trend throughout the second half of August and into September 2025.
– The 50-day and 200-day moving averages are currently sloping downward, confirming the overall downward bias.
– Relative Strength Index (RSI): Remains below the 50 mark, hovering in bearish territory without showing extreme oversold levels, indicating further room for downward pressure.
– MACD (Moving Average Convergence Divergence): Continues to show a bearish crossover, further confirming the current downward trend.
Factors Contributing to Euro Weakness
Several ongoing macroeconomic and geopolitical developments have placed downward pressure on the euro:
– Diverging Central Bank Policies:
– The Federal Reserve has maintained a hawkish tone, maintaining higher interest rates to combat inflation, providing strength to the U.S. dollar.
– In contrast, the European Central Bank has been signaling caution, with many policymakers showing concerns about stagnating Eurozone growth and hinting at potentially halting further rate hikes.
– Weak Eurozone Growth Indicators:
– Recent GDP figures across several major EU economies have come in weaker than expected.
– Industrial activity and consumer spending remain sluggish.
– Inflation Trends:
– The U.S. has seen better success at managing inflation compared to the Eurozone, which continues to face fluctuating consumer prices and production costs.
– Persistently soft inflation in Europe increases the likelihood of the ECB taking a more dovish stance.
– Energy Dependence and Geopolitical Concerns:
– The Eurozone remains highly sensitive to energy price fluctuations, particularly due to its dependency on natural gas imports.
– Continued geopolitical unrest in Eastern Europe increases insecurity in the region, thereby weighing further on the euro.
U.S. Dollar Strength and Market Sentiment
– The U.S. dollar remains broadly supported by:
– Stronger economic data, including labor market indicators and consumer confidence metrics.
– Expectations of the Fed maintaining elevated interest rates for a prolonged period, offering yield advantages for dollar-denominated assets.
– Risk-Off Sentiment:
– In times of growing uncertainty, the U.S. dollar tends to outperform as a safe-haven currency.
– With global equities showing signs of vulnerability, many investors are seeking safety in the dollar
Read more on EUR/USD trading.