EUR/USD Analysis — Euro Extends Bullish Momentum Ahead of Fed Decision

At the moment, according to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, 96.1% of analysts forecast a 25 basis point rate cut to 4.25%. It is also expected that Fed Chair Jerome Powell will indicate the possibility of further monetary policy easing by the end of this year, especially after weak labor market data.

Investor focus also remains on the rhetoric of European Central Bank (ECB) officials: according to European Commission member Peter Kazimir, the regulator should not adjust policy in the event of minor deviations from the inflation target, but rather focus on what lies beyond these temporary fluctuations. The institution’s forecasts indicate an inflation rate below 2.0% for six consecutive quarters from early 2026, and some policymakers argue that this period is sufficient for companies to adjust pricing and wage indexation policies. Another European Commission member, Martin Kocher, believes that while the ECB focuses on average inflation in the euro area as a whole, it is important that inflation differences between individual member states do not widen over the long term. The ECB, meanwhile, has almost completed its cycle of lowering borrowing costs, although current investor forecasts still allow for the possibility of another 25 basis point cut before the end of 2025. Greater concern in the EU stems from the state of the economy and growing political uncertainty amid the crisis in France and rapidly increasing defense spending: the country recently underwent another change of government. The new Prime Minister, appointed by Emmanuel Macron, is Defense Minister Sébastien Lecornu. Observers note that Lecornu takes office with extremely low ratings. Only 16.0% of respondents approve of his candidacy, while 40.0% are strongly opposed. The new French head of government faces the difficult task of reaching a budget compromise for 2026 with opposition parties, something his predecessor failed to do.

Today at 11:00 (GMT+2), the market will focus on July industrial production data in the eurozone: forecasts suggest a sharp increase in the annual figure from 0.2% to 1.7%, and in the monthly figure from –1.3% to 0.4%. At the same time, the overall Economic Sentiment Index from the ZEW Institute in September is likely to decline from 25.1 points to 20.3 points, which could become a noticeable obstacle to the euro’s upward dynamics.

Support and resistance levels

Bollinger Bands on the daily chart show uncertain growth: the price range is widening, giving the bulls room to push toward new local highs. MACD is rising, maintaining a relatively firm buy signal (the histogram is above the signal line). Stochastic shows a similar trend but is currently near the “20” mark, pointing to risks of the single currency being overbought in the ultra-short term.

Resistance levels: 1.1800, 1.1850, 1.1900, 1.1950.

Support levels: 1.1754, 1.1700, 1.1629, 1.1556.

Trading scenarios and EUR/USD forecast

Long positions can be opened after a confident breakout above 1.1800 with a target at 1.1900. Stop-loss — 1.1754. Implementation time: 2–3 days.

A rebound from 1.1800 as resistance followed by a breakdown below 1.1754 may serve as a signal to open new short positions with a target at 1.1629. Stop-loss — 1.1810.