FX.co ★ EUR/USD

The EUR/USD pair had been mired in a six-day declining phase, but market signs suggest the bears' aggressive advance may finally be losing momentum. A rigorous analysis reveals that the bears mounted a genuine offensive only last Friday, sparked by Fed Chair Kevin Warsh’s initial address followed closely by revisions to annual US Nonfarm Payrolls data. Neither of these catalysts was unequivocally bearish, yet the sell-off was unsurprising given how quickly market participants seized upon any pretext to buy the Greenback. While the Nonfarm Payrolls report could have been considerably worse, Warsh's speech reintroduced hawkish nuances into central bank rhetoric; nevertheless, looking past market noise reveals little underlying fundamental justification for sustained dollar strength. The labor statistics ultimately reflected a negative shift, while Warsh merely cited elevated inflation concerns without explicitly promising near-term interest rate hikes. Technically, the euro’s spot price pulled back directly to the base of bullish Imbalance 21, where the decline halted. Although an upcoming slate of major macroeconomic releases could offer bears temporary support, the broader fundamental landscape continues to favor a bullish continuation. First, multi-timeframe charts show the euro ascending from relatively low historical levels compared to its past year's average, leaving significant room for further upside. Second, market participants remain skeptical regarding a September FOMC rate hike, while third, growing doubts surround whether the Fed under Warsh can implement monetary tightening at all. Fourth, recent US economic indicators have delivered consistent disappointment, fifth, geopolitical developments no longer offer reliable safe-haven support to the dollar, and sixth, the European Central Bank (ECB) retains the option for further policy tightening this autumn. Seventh, the US Treasury's decision to increase long-term bond purchases reduces structural demand for the dollar, eighth, renewed trade friction looms between the US, Canada, and China, and ninth, the US labor market is visibly contracting alongside cooling underlying inflation.

With labor market indicators weakening, inflation slowing, and GDP growth losing momentum, the primary monetary tightening thesis that favored dollar bulls earlier this year has inverted. The bears' main potential lifeline rests in a dramatic escalation of Middle East geopolitics; however, President Donald Trump appears disinclined toward direct military conflict, opting instead for economic pressure against Iran. From a structural chart perspective, the primary bullish trend remains intact. Spot price successfully filled the latest bullish Imbalance 21 and retains scope to test the adjacent Imbalance 20 zone. A positive demand reaction across these key fair value gaps could readily re-engage buyers and spark a renewed leg higher toward overhead targets. On Monday, macro updates offered limited support for the single currency, as German inflation printed below consensus expectations, modestly dampening immediate expectations for aggressive ECB tightening ahead of the broader Eurozone CPI release. Nevertheless, structural macro factors—including the lingering impact of policy shifts that weakened the Greenback through late 2025 and into 2026—continue to anchor long-term dollar upside. Moving into Tuesday, September 1, key economic calendar events will shape near-term sentiment: German Retail Sales, Eurozone CPI, US ISM Manufacturing PMI, and US JOLTS Job Openings. With the pair holding critical support around Imbalance 21, the broader technical outlook favors a bullish resumption targeting 1.1797 and 1.1850 once corrective liquidity is fully cleared.