EUR USD Weekly Outlook

EUR/USD has defended pivotal support for a second week, with ECB and U.S. inflation risk poised to test the developing September range.

Last week’s main theme has been a shift away from the US dollar towards currencies of economies with stronger fiscal positions and lower debt levels. The brief rally in long-dated US Treasuries helped fuel gains in gold and silver, while the Swiss franc also benefited from increased haven demand. The euro has performed reasonably well too, with the Eurozone economy continuing to expand modestly despite geopolitical uncertainty and higher energy prices.

While the focal point for last week was USD/JPY, EUR/USD rallied up to a fresh monthly high before finding sellers at the familiar resistance level of 1.1576.

EUR/USD rallied more than 2% from the yearly low, but the first major resistance test should reveal whether buyers can sustain the recovery.

EUR/USD pushed a fresh monthly high, but EUR/JPY broke down to a fresh monthly low, highlighting the dominating factor pushing FX markets with the USD/JPY carry trade reversal.

EUR/USD is stuck in a range just above pivotal support as a four-week standoff enters a critical phase ahead of next week's ECB rate decision.

The EUR/USD reversed earlier gains to close lower on Friday after the earlier optimism about the Strait of Hormuz re-opening failed to keep the dollar and crude oil under sustained pressure. While crude oil fell about 9% on the day, it closed well off its earlier lows.

EUR/USD is consolidating just below key resistance as pressure builds. A breakout could define the next major move.

Euro plunged more than 1.7% to mark the largest single-week loss since 2024. The next test comes at a major support zone that could decide the trend.