The EUR/USD currency pair saw a notable pullback after hitting its peak in four years earlier this week. The pair first peaked at 1.1918 on Wednesday, its highest level in 2025. By the end of the trading week, that spike had nearly all evaporated. It soon thereafter found a home near 1.1750. This movement raises critical questions about the future trajectory of the euro against the US dollar, especially in light of upcoming economic data releases.
All eyes among market participants are glued on the volatility in the EUR/USD currency pair. They have flagged near-term resistance at 1.1830 and more significant resistance somewhat higher, around 1.1920—the recent spike high. Analysts are arguing that should the euro successfully break these hurdles, we could see it eyeing the psychologically important 1.2000 figure. Technical indicators are flashing red for a steep drop. Most forecasters think the currency pair is poised to fall much further.
Technical Analysis Signals Caution
It’s our view that the technical picture ahead may be rather convoluted. That may explain why this week’s weekly chart features a candle with a long and inconvenient upward wick. Its little body remains well contained within known ranges. This formation may be a sign of uncertainty among traders about where the pair should trend next.
Additionally, moving averages for the EUR/USD currency cross have experienced a consistent erosion of bullish energy. The long flat 20 Simple Moving Average (SMA) sits just higher at 1.1710. At the same time, the flat 100 SMA is sitting at the 1.1560 area. These signs point to a trading environment where caution should be a top priority as traders weigh their next move.
On the daily chart, 1.1700 support is unbroken and continues to be a solid floor. This level will become crucial as we near the more key 1.1590 area. Under the hood, technically speaking, it’s worth noting that traders are coming off a phenomenal rally earlier this week. Today, they’re being more conservative as they assess the risk of unexpected volatility down the road.
Upcoming Economic Data to Influence Market Sentiment
So now, the wait is on for every significant economic data release. These announcements are poised to cause major volatility for the EUR/USD cross in the next few days. That Friday, the US will release the August PCE Price Index. This release is extremely important. It would help us better understand inflation trends and consumer spending patterns across the United States.
On Wednesday, market will receive the third and final estimate of the Q2 Gross Domestic Product (GDP). Analysts are anticipating it will confirm an even more robust annualized growth rate of 3.3% for the three months ending in June. This will be a closely watched figure by investors. Depending on its extent, it may affect Federal Reserve policy and is likely to affect US dollar sentiment.
In August, US retail sales were up 0.6%, pointing to resilience in consumer spending amidst fears of a broader slowdown. This positive trajectory would help to restore confidence in the US economy and have a second order impact on currency valuations.
“Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem.” – Jerome Powell
As Federal Reserve Chair Jerome Powell emphasizes the importance of controlling inflation, market participants remain vigilant about how these economic indicators will shape monetary policy decisions moving forward.
European Economic Outlook Remains Positive
On the European front, analysts are expecting a small increase in business activity. Including this increase will help add context to the performance of the EUR/USD currency pair. At least one analyst thinks better business sentiment could prop the euro up against its US rival, despite the clouds of uncertainty still hovering.
Getting the balance right between US economic strength and European economic recovery is proving a tall order for currency traders. The diverging paths of these major economic indicators will continue to create swings as investors reprice based on greater clarity.
Both regions are scheduled to release some very important data within the month. Market participants will pay especially close attention to how these developments influence investor sentiment and trading strategies for the EUR/USD pair.