EUR/USD holds $1.17 as dovish Powell comments lift euro

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EUR/USD holds 1.17 after Powell

Highlights

- EUR/USD trades near 1.17 after Friday’s surge, reclaiming key moving averages and trendline resistance.

- Powell’s Jackson Hole comments boosted rate-cut odds, weighing on the dollar into this week’s U.S. data.

- Near-term resistance sits at 1.1735–1.1750, with 1.1780–1.1820 as the extension target if momentum builds.

Powell said risks to employment are rising and hinted that the balance of risks may justify easing. Rate markets quickly repriced, with traders now assigning roughly 75 percent odds to a September cut, down from above 90 percent earlier this month but still supportive for euro bulls.

Technical positioning

EUR/USD has reclaimed a falling trendline that capped rallies through mid-August, shifting bias back to the upside. The recovery began from 1.1630, which coincides with the 61.8 percent retracement of the late-July downswing. The 20, 50, 100, and 200 EMAs cluster tightly between 1.1640 and 1.1660, creating first support on dips. The next pivot is 1.1700–1.1710, aligning with the 78.6 percent retracement. Above it, resistance sits at 1.1735–1.1750, and a clean break would unlock 1.1780–1.1790, with extension potential toward 1.1820.

EUR/USD price dynamics (Source: TradingView)

Momentum indicators confirm stabilization. The four-hour RSI surged from oversold to the low 60s during Friday’s rally and has since cooled to its midline, a typical reset before a secondary push. If RSI holds above 45–50, buyers remain favored. A decisive drop below that zone would shift focus back to the EMA cluster for deeper testing.

Macro drivers and outlook

Dollar weakness is dominating near-term flows. The upcoming U.S. calendar includes new home sales and speeches from Fed officials John Williams and Lorie Logan, but the key event is Friday’s core PCE inflation report. A softer print would validate the easing narrative and keep EUR/USD probing the upper range. A strong reading, however, could revive dollar strength and send the pair back into the mid-1.16s. On the European side, fundamentals remain subdued but stable. The German IFO survey is expected near 88.6, reflecting stagnation rather than further deterioration. Meanwhile, cross-asset sentiment is supportive: Wall Street’s rally lifted equities, credit markets remain calm, and European yields have edged lower, all of which improve risk appetite and reduce the dollar’s relative carry advantage.

For traders, the playbook is defined. Pullbacks into 1.1680–1.1700 look buyable as long as the EMA band holds. A sustained break through 1.1750 would confirm bullish continuation, targeting 1.1780 and 1.1820. Bears need a close below 1.1660 to shift control back toward 1.1635 and potentially 1.1540.

In earlier coverage, we highlighted EUR/USD’s vulnerability when German GDP was revised lower and Fed rate-cut odds retreated, keeping pressure on the euro. The latest rebound shows how quickly sentiment can swing when policy expectations shift. This underscores the importance of data in confirming or challenging the easing narrative as summer trading winds down.

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