Euro holds gains as EUR/USD tests key resistance near $1.17

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EUR/USD price action holds near $1.17

Highlights

- EUR/USD trades near 1.1685, testing key resistance at 1.17.

- Fed rate cut bets weaken dollar, while ECB pauses after eight cuts.

- Short-term bias remains buy-the-dip unless 1.1625 support breaks.

The immediate cap lies at 1.1700 to 1.1710, coinciding with the 78.6 percent Fibonacci retracement near 1.1703 from the 1.1393–1.1787 swing. Until that shelf is reclaimed on a closing basis, the pair is likely to consolidate gains within the channel. The short-term trend structure remains constructive. The four-hour chart shows a positive moving average alignment, with the 20-EMA at 1.1681 above the 50-EMA at 1.1657 and 100-EMA at 1.1642, reinforcing a demand zone between 1.1660 and 1.1625.

EUR/USD price dynamics (Source: TradingView)

This cluster has repeatedly cushioned intraday declines. As long as EUR/USD price holds above the 50 and 100-EMA band, the path of least resistance points to gradual upside. A break below 1.1625, however, would shift sentiment toward a deeper correction targeting 1.1590 and 1.1545.Momentum indicators support a steady grind higher rather than an exuberant rally. The four-hour RSI sits at 54, based on corrections above the 50 center line. A push above 60, alongside a breakout over 1.1710, would signal stronger follow-through. Failure to do so could prolong range-bound action near the channel’s midline.

Macro backdrop favors measured euro strength

Macroeconomic forces continue to shape the cross. In the United States, softer payrolls and a weaker ISM Services PMI have reinforced expectations of imminent Federal Reserve rate cuts, reducing dollar support from yields. Across the Atlantic, the European Central Bank ended its latest easing cycle in July after eight cuts over the past year, bringing borrowing costs to their lowest since late 2022. While some investors still price a chance of another ECB cut before year-end, policymakers appear set to pause until fresh growth and inflation data emerge.

Euro area fundamentals remain steady, if not strong. Second-quarter GDP expanded 0.1 percent, while headline inflation stayed anchored at 2 percent in July. This combination supports a patient ECB stance. Political risk, however, adds another layer of uncertainty. Markets will closely monitor the upcoming meeting between U.S. President Trump and Russian President Putin, with Ukraine’s President Zelenskyy reportedly not attending. Any movement toward de-escalation could lift risk sentiment and weigh on the dollar, while renewed friction would have the opposite effect. Trade tensions also remain a risk factor, with the potential for 15 percent U.S. tariffs on European goods threatening to undercut the euro’s medium-term outlook.

Short-term outlook as euro tests supply

The coming sessions will hinge on whether EUR/USD can finally clear the 1.1700–1.1710 shelf. A four-hour close above this zone would open the way to 1.1735 and then the early August highs at 1.1780–1.1787 near the channel top. Profit taking is likely around that region. A daily close through 1.1790 would confirm a bullish continuation, shifting targets toward 1.1820–1.1850. On the downside, initial support rests at 1.1660 to 1.1650 around the rising 50-EMA and channel midline. Below 1.1635, risks build for a retest of 1.1589 Fibonacci support and then 1.1543.

Trading bias into the weekend remains buy-the-dip within the channel as long as 1.1625 holds. Dips toward 1.1660–1.1650 offer favorable risk-reward for a retest of resistance, with potential extension higher if buyers secure a breakout. If 1.17 once again rejects price and 1.1635 fails, traders should respect the risk of deeper downside rotation. The technical picture remains balanced but constructive, supported by a macro backdrop of expected Fed easing and an ECB on pause.

In earlier discussions, we noted that EUR/USD’s consolidation above 1.16 signaled resilience despite U.S. dollar strength. That observation has held, with the rising channel structure now confirming the pair’s gradual shift toward recovery.

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