Last Updated on August 25, 2026 by Deon
The EUR/USD currency pair is under selling pressure as the US Dollar is making a small recovery. After hitting a four-day high to 1.1711 EUR/USD has gone down to the 1.1650 level as traders are being more careful before major US economic reports and the Jackson Hole Symposium.
This pair is still being watched by traders because what happens with the European Central Bank and the Federal Reserve could decide the next big move. At the time events in the Middle East are making people want the US Dollar more because it is seen as a safe place to keep money.
EUR/USD Drops as Dollar Comes Back
EUR/USD is having trouble keeping the gains. FXStreet said the pair was near 1.1655 on Tuesday after going down from the 1.1711 level. This change shows more people want the US Dollar as investors are taking risk before big economic events.
The US Dollar Index has also gone up to the 99.00 level. Demand for safe-haven currency higher Treasury yields and not knowing what the US monetary policy will do are helping the Dollar get some of its losses back.
However the overall future for the Dollar is still not clear. People are still trying to figure out if the current strength is a short break or the start of a bigger recovery.
ECB Rate Hike Expectations Help the Euro
One of the reasons the Euro is doing better is the chance that the ECB might raise interest rates again in September.
Higher oil prices, higher bond yields and problems in the Middle East are making people worry more about inflation in the Eurozone. These events are making the market think the ECB might be more strict with its policies and a 25-basis-point increase is expected for September.
Higher interest rates can make a currency more interesting because they can lead to returns on assets in that currency. So if the ECB keeps raising rates that could protect EUR/USD even if it has some short-term drops.
US Data and Jackson Hole Are Important
The next big influence on the EUR/USD forecast will probably come from the US.
Investors are looking at US inflation numbers the July Personal Consumption Expenditures Price Index. This report could affect what people think about the Federal Reserves interest rate choices.
Markets are also getting ready for the Jackson Hole Symposium, where Fed Chair Kevin Warsh is expected to speak. Any sign about where US monetary policy’s going could cause a lot of movement in the Dollar and EUR/USD.
Before these events traders are also watching US consumer confidence and July new home sales numbers. FXStreet says these releases are some of the US events to watch on Tuesday.
Key EUR/USD Fundamental Drivers
Factor Potential EUR/USD Impact
ECB rate hike expectations Supports Euro
Strong US economic data Supports US Dollar
Higher US Treasury yields Can pressure EUR/USD
US inflation Could weaken USD
Middle East tensions Can support safe-haven USD
Hawkish ECB guidance Positive for EUR
Hawkish Fed expectations Negative for EUR/USD
EUR/USD Technical Analysis
From a technical point of view EUR/USD still has a positive medium-term setup but the recent drop shows that buyers are not ready to push the pair clearly above its August high.
FXStreet says the 1.1622 level is a support point. Below that the 20-day Exponential Moving Average near 1.1577 is another area for buyers.
The pairs Relative Strength Index is still in the area meaning that the upward movement has not completely stopped. However traders want to see EUR/USD get back to its high before thinking the upward trend is stronger.
EUR/USD Support and Resistance Levels
Technical Level Importance
1.1800 resistance
1.1750 Psychological resistance
1.1711 Recent August high
1.1650 Immediate support
1.1622 Key short-term support
1.1577 20-day EMA
1.1500 Major downside level
FXStreets general technical view mentions 1.1700 as the first important resistance. If the pair stays above that level it could move to 1.1750 then to the May high around 1.1795 and the 1.1800 level. A stronger move up could target 1.1849.
On the side if the pair goes below 1.1650 attention could shift to the 200-day SMA near 1.1631 then to 1.1600 and the 100-day SMA near 1.1574.
What Might Happen Next for EUR/USD?
In the term the outlook will likely depend a lot on US data and what the central banks say.
A move back above 1.1711 would strengthen the outlook and could lead the pair to 1.1750 and eventually 1.1800. A clear move above 1.1800 would show that buyers are in control again.
On the side if the pair can’t stay above the 1.1622–1.1650 support area more selling could happen. In that case EUR/USD could go to 1.1577 and maybe even 1.1500.
The direction of the US Dollar will be very important. Events in the Middle East can create demand for the Dollar as a safe place to keep money while lower US inflation or a more relaxed Federal Reserve could weaken the Dollar and give the Euro another chance to go up.
EUR/USD Forecast: Bullish View Has a Big Test
Overall the EUR/USD forecast is cautiously positive from a point of view but the pair is currently going through a correction. ECB plans to increase rates continue to support the Euro while the Dollar coming back’s limiting the gains.
The next big test will come from US PCE inflation numbers. What the Federal Reserve says. Traders should also keep an eye on what’s happening in the Middle East because sudden changes in risk feelings can quickly affect the Dollar.
For now 1.1711 is the level to watch for an upward move while 1.1622 and 1.1577 are important levels, for a downward move. If the pair breaks out of this range it could give an idea of where EUR/USD is going next.
