Powell noted that “radical changes” in tax, trade, and immigration policies have increased risks of a cooling labor market and rising prices, potentially leading to stagflation. However, the current hawkish rhetoric, baseline forecast, and shifting risk balance could require monetary policy adjustments. Investors interpreted these remarks as a signal for a possible 25bp rate cut in September, with probability reaching 85% according to CME FedWatch Tool.

In contrast, European Central Bank (ECB) officials are unlikely to adjust borrowing costs in the near term. Rates have been cut steadily since mid-last year, helping stabilize inflation at the 2.0% target (July CPI) while maintaining GDP growth (Q2 GDP rose 0.1% QoQ and 1.4% YoY). Analysts believe the ECB will likely hold steady and delay further easing until December unless U.S. tariffs create critical pressure.

This divergence in Fed and ECB outlooks is expected to support medium-term growth in the EUR/USD forecast and weekly outlook.

Support and Resistance Levels

The pair is testing 1.1719 (Murray level [8/8]); a breakout higher would target 1.1841 (Murray level [+2/8]) and 1.1963 (Murray level [+2/8], W1). If 1.1597 (Murray level [6/8], mid-Bollinger band) breaks, the euro course could decline toward 1.1475 (Murray level [4/8]) and 1.1353 (Murray level [2/8]).

Technical indicators give mixed signals: Bollinger Bands are flat, MACD histogram rises in positive territory, and Stochastic bounced up from oversold.

  • Resistance: 1.1719, 1.1841, 1.1963
  • Support: 1.1597, 1.1475, 1.1353

Trading Scenarios

Long positions may be opened above 1.1719 with targets at 1.1841, 1.1963 and stop-loss at 1.1640. (Implementation: 5–7 days)

Short positions may be opened below 1.1597 with targets at 1.1475, 1.1353 and stop-loss at 1.1680.

EUR/USD

Scenario

  • Timeframe: Weekly
  • Recommendation: BUY STOP
  • Entry point: 1.1720
  • Take Profit: 1.1841, 1.1963
  • Stop Loss: 1.1640
  • Key levels: 1.1353, 1.1475, 1.1597, 1.1719, 1.1841, 1.1963

Alternative Scenario

  • Recommendation: SELL STOP
  • Entry point: 1.1595
  • Take Profit: 1.1475, 1.1353
  • Stop Loss: 1.1680
  • Key levels: 1.1353, 1.1475, 1.1597, 1.1719, 1.1841, 1.1963