EUR/USD Price Forecast: Remains sideways ahead of key US events

Market impact: Neutral to mildly bullish EUR/USD, but highly event-dependent.

EUR/USD’s tight range near 1.1660 reflects a market waiting for confirmation rather than a decisive change in currency fundamentals. The immediate catalyst is the US July PCE release, followed by Federal Reserve Chair Kevin Warsh’s remarks at the Jackson Hole Symposium. With consensus core PCE at 3.3% year over year—unchanged from the prior reading—the risk is asymmetric around any meaningful deviation from expectations.

A stronger-than-expected core PCE result would likely support the dollar by reducing expectations for near-term Fed easing or encouraging a more hawkish policy interpretation. That would pressure EUR/USD, particularly because the pair’s recent momentum is already approaching overbought territory. A softer inflation result would have the opposite effect, potentially reinforcing expectations for lower US yields and allowing EUR/USD to challenge the recent 1.1711 high and, beyond that, the 1.1800 area identified in the article.

The euro has a separate supportive factor: markets are positioned for a final 25-basis-point ECB hike in September, taking the policy rate to a 2.50% terminal level. This provides a relative-rate cushion for the euro, but its bullish value may already be reflected in positioning. If the ECB hike is interpreted as the end of the tightening cycle rather than the start of further action, it may limit sustained upside unless US data simultaneously weakens.

Technically, the setup is constructive but vulnerable to a pullback. The pair remains above the cited 20-day EMA around 1.1587 and the 200-day moving average near 1.1632, while support is noted around 1.1650–1.1600. However, an RSI near 68–70 indicates strong momentum with limited room for disappointment; a hawkish US inflation or Fed signal could trigger a sharper correction than the current range suggests.

Trading implications:

the initial reaction is likely to be driven more by US rate expectations than by the ECB outlook. Monitor the core PCE monthly component, US Treasury yields, the dollar index, and the wording of Jackson Hole remarks. A sustained EUR/USD breakout would require either clear evidence of softer US inflation/Fed rhetoric or confirmation that euro-area resilience is strong enough to support policy beyond the expected September hike. Conversely, a break below the cited support region would weaken the near-term bullish structure and signal that US policy repricing is dominating the euro’s rate advantage.