Last Updated on September 4, 2026 by Deon
The Euro is slowly bouncing back against the US dollar as the market eases the selling pressure that followed Kevin Warsh’s speech last week. EUR/USD is moving back toward the 1.1650 level helped by a Dollar environment and growing demand for major currencies that benefit from growth.
ING analysis shown on FXStreet says the Euro’s recovery is steady not quick. The pair benefits from weakness in the US Dollar but uncertainty about the Federal Reserve’s future policy still matters to traders.
EUR/USD Moves Toward 1.1650
Before the sell‑off tied to Warsh’s remarks EUR/USD traded near the 1.1650 level. The pair fell after the speech. Is now slowly recovering as markets undo some of those earlier moves.
The recent rebound indicates that the first market reaction might have been too strong. As the selling pressure on the Euro fades traders are again looking at broader currency market developments.
A softer US Dollar has made a supportive setting for EUR/USD. The Dollar is under pressure not against the Euro but also against emerging‑market currencies and other growth‑friendly currencies in the G10 group.
This wider Dollar weakness helps the Euro recover even though the outlook for US interest rates stays uncertain.
Softer US Dollar Supports the Euro
The performance of the US Dollar remains one of the drivers for EUR/USD. When the Dollar weakens the Euro often finds it easier to rise against the US currency.
ING strategist Chris Turner said the current environment is generally supportive for EUR/USD because of selling pressure on the Dollar. However the Federal Reserve outlook stays uncertain which could create volatility in the pair.
Traders closely watch US economic data, especially labor market figures for clues about the future direction of US monetary policy.
A than‑expected economic report could put more pressure on the Dollar if investors think the Federal Reserve may need to take a less restrictive approach. On the hand stronger data could support the Dollar and limit the Euro’s recovery.
Therefore the next big move in EUR/USD may depend on both US data and shifting expectations for Federal Reserve policy.
German Elections Create a Risk
While the Euro benefits from the weaker Dollar political moves in Germany could add more uncertainty.
ING pointed out the local elections in Saxony‑Anhalt as a possible risk for the single currency. A strong result for the Alternative for Germany party could raise questions about the political stability of Chancellor Friedrich Merz’s government.
Political uncertainty can hurt investor confidence especially when worries grow about the stability of Europe’s economy and its government.
For now this is a risk, not the main driver of EUR/USD. Still traders will probably watch the election results and any possible effect on European political sentiment.
If political concerns rise they could slow the Euro’s recovery. Make investors more cautious.
EUR/GBP Consolidates Above 0.86
The report also mentioned EUR/GBP, which recently moved above the 0.86 level.
The pair is now consolidating after its rise. Concerns about UK government finances and the sell‑off in government bonds have added pressure on the British Pound.
The gilt market stays a focus because higher borrowing costs can make UK public finances harder.
Inflation worries in the United Kingdom are still present. This means traders may keep expecting the Bank of England to keep a restrictive policy.
Market pricing suggests that more Bank of England tightening expectations could stay for a while possibly limiting the Euro’s rise against the Pound in the term.
EUR/GBP Range Could Continue Before Next Move
ING expects EUR/GBP to trade in a range around 0.8550 to 0.8600 before moving
The 0.86 area is therefore a level for traders watching the pair. A steady move above this zone could boost the outlook and open the door to a possible rise toward 0.87 later in the fourth quarter.
However currency markets stay very sensitive to changes in inflation expectations central bank policy and government bond yields.
Any major shift in expectations for the Bank of England could quickly change the outlook for the Pound and EUR/GBP.
What Is Next for EUR/USD?
The short‑term outlook for EUR/USD stays closely tied to the direction of the US Dollar.
The slow recovery toward 1.1650 shows that the Euro has gained some stability after the Warsh‑related sell‑off. A continued weak Dollar could let EUR/USD test. Move above this key area.
However traders should stay cautious. The Federal Reserve outlook remains uncertain and upcoming US economic data could strongly affect interest rate expectations.
Political moves in Germany also pose a risk for the Euro. While they are not the driver of the pair right now stronger political uncertainty could affect investor confidence.
The Euro is slowly bouncing back against the US Dollar as markets unwind the sell‑off that followed Kevin Warsh’s speech. EUR/USD is moving back toward 1.1650 helped by a softer Dollar environment.
The next move for the pair will likely depend on US data and changing expectations for Federal Reserve policy. At the time German election moves could add more uncertainty for the Euro.
Meanwhile EUR/GBP is consolidating after moving above 0.86. ING sees the pair possibly trading in the 0.8550–0.8600 range before a rise toward 0.87 later in the fourth quarter.
For now the Euro’s slow recovery stays strong. Traders will keep watching the US Dollar, central bank expectations, political moves and key economic data, for the next big market signal.
