As of today, the EUR/USD chart shows a notable strengthening of the euro against the US dollar. The pair has climbed above the 1.1670 level, up from the 1.1400 range observed at the beginning of August.
What’s Driving the EUR/USD Rally?
According to Reuters, the recent weakness in the US dollar can be attributed to several key factors:
→ Growing expectations that the Federal Reserve will cut interest rates, especially after last week’s disappointing US labor market data.
→ Investor focus on the upcoming US inflation report, due on 12 August at 15:30 GMT+3, which could influence future monetary policy.
At the same time, the euro is gaining strength due to rising optimism over a potential resolution to the ongoing conflict in Ukraine. Hopes are also high for a possible meeting between US President Donald Trump and Russian President Vladimir Putin, which could ease geopolitical tensions.
Back on 30 July, we suggested that after hitting its July low, EUR/USD could begin a recovery — which has since unfolded. But is the pair now showing clear bullish momentum?
Not quite. A firm bullish trend is still in question due to the continuing pattern of lower highs and lower lows (A-B-C-D), which points to an ongoing bearish market structure.
Additionally, the descending channel on the EUR/USD chart has become more clearly defined. After briefly consolidating near the median line of the channel (highlighted with a circle), the price has risen towards the upper boundary. It’s important to note that this area previously triggered a sharp selloff (marked with an arrow), which broke through the blue support line.
Taking these elements into account, it’s possible that sellers will become more active near current price levels. This could slow or even reverse the recent upward move, especially if bearish momentum picks up again.
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