The euro held firm against the dollar on Wednesday, supported by a decline in energy prices and lower U.S. Treasury yields, while markets awaited key U.S. inflation data and a high-profile speech by Federal Reserve Chair Kevin Warsh.
Lower oil prices have eased concerns over inflation, reducing the upward pressure on Treasury yields. U.S. 10-year yields fell roughly 10 basis points over the past week, following a sharp drop in oil prices since last week and a reported intervention in the Treasury market by U.S. Treasury Secretary Scott Bessent. The decline in energy costs has also been reinforced by tentative progress in peace talks brokered by Pakistan, which have temporarily reduced geopolitical risk premiums in oil markets.
Attention is now focused on the U.S. core Personal Consumption Expenditures (PCE) price index, due later on Wednesday. A reading around 0.2% month-on-month would likely leave the dollar broadly stable, though a softer-than-expected print could reinforce the current benign backdrop for risk assets and tilt the balance toward modest dollar weakness. Preliminary second-quarter U.S. GDP data, also due Wednesday, is expected to confirm annualized growth of 1.5%, unchanged from the Advance estimate.
The euro’s resilience has been further underpinned by stronger-than-anticipated Eurozone economic data, despite elevated energy prices earlier this year. European Central Bank policymaker Isabel Schnabel has noted the economy’s surprising resilience, reinforcing expectations for a 25-basis-point rate hike to 2.50% in September, with a potential follow-up hike early next year still in play.
Technical levels remain a key focus for EUR/USD traders. The pair is consolidating above the 1.1575–1.1625 range, which includes the 200-day moving average and the origin of the recent breakout. As long as the pair holds above this support zone, the analysis suggests the technical bias remains bullish. A sustained break below 1.1575/70 would weaken the current structure and raise the risk of a false breakout.
On the upside, the next resistance level is seen at 1.1700, where the 50% retracement of the January-to-June decline converges. Beyond that, the 1.1800 level—marked by the 61.8% Fibonacci retracement—serves as the next major target. The analysis notes that a modest pullback ahead of Friday’s Jackson Hole symposium is not unexpected, given the proximity to the 1.1700 resistance.
All eyes will turn to Fed Chair Warsh’s speech on Friday, which could further influence Treasury yields and the dollar’s direction. The combination of softer energy prices, lower yields, and cautious optimism around inflation has so far limited the dollar’s downside momentum, though the sustainability of these trends remains contingent on incoming data and central bank communications.
