The euro advanced to 1.1700 at the start of the week, its highest level since May, as the dollar weakened following the US Treasury’s decision to expand its bond buyback program.
Eurozone economic activity continued to expand in August, with Germany’s industrial sector showing the most significant improvement. Consumer inflation expectations in the bloc edged slightly lower to 2.9% from 3.0%, though they remain above the European Central Bank’s target, reinforcing expectations for further policy tightening.
This week’s economic calendar features a series of releases from both the eurozone and the United States. Germany’s Ifo business climate index is due Tuesday, while France will report preliminary inflation figures on Friday. The US data slate includes core PCE, the second estimate of Q2 GDP, durable goods orders, and personal income and spending on Wednesday, followed by the annual revision to nonfarm payrolls on Friday. A weak US data print could further pressure the dollar and support EUR/USD, while stronger-than-expected inflation or growth figures may allow the US currency to recover some ground.
Technical analysis suggests the pair remains in a consolidation phase around the 1.1668 level. According to the analysis, an upside breakout could push the exchange rate toward 1.1811 before a potential pullback to 1.1581. Conversely, a downside breakout may open the way for a move to 1.1455, with scope for a further decline to 1.1400. The MACD indicator on the H4 chart shows a signal line above zero but trending downward, reflecting continued bearish momentum.
On the H1 chart, EUR/USD has risen to 1.1710, with a consolidation range forming below this level. The analysis expects a move lower toward 1.1622, with potential for a further decline to 1.1611. The Stochastic oscillator’s signal line, currently above 80 and trending toward 20, indicates short-term downside pressure.
The near-term direction of EUR/USD will hinge on upcoming economic data and central bank signals, with the underlying fundamentals remaining moderately positive for the single currency.
