FX.co ★ EUR/USD

The EUR/USD currency pair settled marginally higher in the 1.1580 region over the week, yet it remains constrained within a defined range as market participants contend with a lack of definitive directional catalysts. Spot price continues to hover near its August peak at 1.1581, supported primarily by muted demand for the U.S. Dollar (USD). This Greenback weakness stems from a backdrop of mixed economic indicators, including soft labor market signals and cooling domestic inflation figures, which have effectively lowered market expectations for aggressive Federal Reserve monetary tightening. Compounding this lack of momentum is the ongoing geopolitical standoff between the United States and Iran, where a tense stalemate persists in the absence of either direct military escalation or diplomatic resolution. Geopolitical risks centered in the Middle East remain a key driver of market sentiment, particularly surrounding the Strait of Hormuz. Maritime transit through the strategic waterway remains severely disrupted, elevating global oil prices and raising market concerns regarding secondary inflationary pressures across global supply chains. While U.S. Treasury Secretary Scott Bessent warned Tehran of unprecedented economic isolation demanding a full cessation of its nuclear program, Iranian leadership maintains its claim of authority over the sea passage, asserting that regional conflicts will persist through the current U.S. presidential term ending in 2029. Furthermore, with the expiration of the June Memorandum of Understanding (MoU) approaching, the market remains wary that the absence of a diplomatic framework could trigger renewed tactical exchanges and reignite geopolitical risk premiums. Macroeconomic data out of the U.S. supported the case for a dovish Federal Reserve outlook. July U.S. Consumer Price Index (CPI) print showed headline annual inflation moderating to 3.4% from June's 3.5%, matching market forecasts. Core CPI similarly decelerated to 2.5% YoY from 2.6% in June. These figures reinforced expectations for the Fed to hold benchmark interest rates steady at its upcoming September policy meeting. Additional domestic indicators presented a mixed picture: July Retail Sales grew by 0.5% with June figures upwardly revised to 0.8%, while the Preliminary August University of Michigan Consumer Sentiment Index contracted to 51.0 from 55.2 in July. Notably, 1-year inflation expectations within the survey edged higher to 4.3% from 4.2%, whereas the 5-year outlook held steady at 3.3%. In the Eurozone, economic performance remains constrained, offering limited independent momentum for the shared currency. Germany's July Harmonized Index of Consumer Prices (HICP) was confirmed at 2.8% YoY, matching initial estimates. Meanwhile, the second estimate for Q2 Eurozone Gross Domestic Product (GDP) confirmed a modest quarterly expansion of 0.4%. Despite subdued growth dynamics, sticky baseline inflation has cemented market pricing for a 25 basis point interest rate hike by the European Central Bank (ECB) at its September gathering, with swap markets pricing in a 90% probability according to the ECB Watch tool. From a technical chart perspective on the daily timeframe, EUR/USD maintains a constructive posture at 1.1582. The pair trades securely above its 100-day Simple Moving Average (SMA) at 1.1568 and its 20-day SMA at 1.1482. However, upside extension remains capped by the 200-day SMA, which acts as immediate overhead resistance at 1.1630. Daily momentum oscillators reflect a bullish bias, with the 14-day Relative Strength Index (RSI) advancing at 63 and the 14-period Momentum indicator holding firmly above its zero threshold, signaling sustained buying interest. Conversely, the weekly timeframe reflects a neutral-to-subdued outlook. Although price action holds above the 20-week (1.1569), 100-week (1.1321), and 200-week (1.1050) SMAs, the weekly Momentum indicator remains slightly depressed in negative territory while the weekly RSI hovers around 51, pointing to consolidation rather than a strong structural trend. Initial topside resistance rests at the 200-day SMA at 1.1630, where a breakout would open the path toward 1.1700. On the downside, immediate support lies near 1.1560, followed by a deeper structural floor at 1.1470.