EUR/USD Price Forecast: Upbeat US Dollar stresses on major currency pair

Market impact: Moderately bearish for EUR/USD in the near term, but the signal is conditional.

The key market driver is the widening policy-risk asymmetry: Fed Chair Kevin Warsh reportedly left the door open to further tightening unless underlying inflation improves convincingly, reinforcing expectations of higher US rates. That supports the dollar through higher Treasury yields and increased carry demand, putting downward pressure on EUR/USD.

Eurozone inflation is a countervailing factor rather than a clear bullish catalyst. Headline HICP accelerated to 3.3% year over year in August, but the figure matched expectations and core inflation eased to 2.4% from 2.5%. The combination reduces the likelihood of a major positive surprise for the euro: headline inflation may limit aggressive ECB easing, while softer core inflation weakens the case for a more hawkish ECB response.

The immediate market sensitivity is therefore concentrated on US data due later on September 1: July JOLTS job openings and August ISM Manufacturing PMI. Strong results would validate the “higher-for-longer” or renewed-hiking Fed narrative and could extend EUR/USD losses. Weak data would undermine dollar momentum, encourage profit-taking, and allow the pair to recover despite the still-hawkish Fed communication.

The article’s technical structure supports the bearish short-term interpretation: EUR/USD was trading below its 20-period four-hour EMA at 1.1618, with RSI at 36, while 1.1580 was identified as nearby support. A sustained move below that support would suggest that macro-dollar strength is being confirmed by price action; recovery above 1.1618 would weaken the immediate bearish bias. These are reference levels from the source, not independent trading signals.

Cross-market implications:

the same policy repricing would generally be supportive of the DXY and US yields, while weighing on gold and other rate-sensitive assets. The effect could become broader if strong US data also triggers a risk-off response, but a growth-negative US surprise could instead weaken the dollar despite elevated rate expectations.

What traders should monitor next:

the actual JOLTS and ISM outcomes versus consensus, movements in front-end US yields, subsequent Fed guidance on inflation, and whether Eurozone core inflation continues to cool. The bearish EUR/USD case is vulnerable if US data disappoints or if markets conclude that the Fed’s hawkish stance is not likely to translate into actual additional hikes.