New York – The Euro against the US Dollar, commonly referred to as EUR/USD, is currently exhibiting stability following a decline last week, buoyed by a moderation in anticipations of interest rate reductions by the Federal Reserve. Investors are now keenly focused on forthcoming economic indicators, specifically Gross Domestic Product (GDP) and the Personal Consumption Expenditures (PCE) price index, as these releases are widely expected to dictate the pair’s near-term movement.
Federal Reserve Policy Divergence
Table of Contents
- 1. Federal Reserve Policy Divergence
- 2. Key Economic Data Releases to Watch
- 3. EUR/USD Technical Analysis
- 4. Understanding currency Pair Dynamics
- 5. Frequently Asked Questions About EUR/USD
- 6. How does the confluence of previous highs, Fibonacci retracement levels, and order book analysis strengthen the significance of the 1.1840 supply zone?
- 7. EUR/USD: Potential Mid-September Rally Triggered by Clearance of 1.1840 Supply Zone
- 8. Identifying the 1.1840 supply Zone
- 9. The Significance of a Breakout
- 10. Factors Supporting a Potential Rally
- 11. Risk management & Trading Strategies
- 12. Real-World Example: The June 2023 Breakout
- 13. Monitoring Key Economic Data releases
- 14. Utilizing Trading Platforms & Tools
The mood surrounding the federal Reserve’s actions last week is subsiding, with attention turning to future monetary policy. current market consensus anticipates at least one 25-basis-point rate cut; though, recent statements from Federal Reserve officials, including Chairman Jerome Powell, hint that persistent inflationary pressures could impede further cuts in the immediate future. As of September 2025, the united States annual inflation rate is 3.2%, still surpassing the Fed’s 2% objective.
A recent survey of Federal Open Market Committee (FOMC) members revealed a division in outlook. Seven officials foresee no additional rate cuts this year, ten predict a cumulative 50-basis-point reduction by December, while two anticipate a single 25-basis-point cut. This split suggests that while some easing is expected, the extent of it remains uncertain.
Key Economic Data Releases to Watch
This week’s economic calendar features two crucial data points. On Thursday, the United States will release its updated GDP figures. Experts predict an unchanged annualized growth rate of 3.3% mirroring the previous quarter’s performance. This sustained growth could complicate the Fed’s efforts to justify further easing.
Friday will see the publication of the PCE price index, the Federal Reserve’s preferred measure of inflation.the index has remained stable at 2.6% year-over-year for the past two months, but any deviation could substantially impact market sentiment.
| Economic indicator | Release Date | Expected Value | Previous Value |
|---|---|---|---|
| US GDP (Annualized) | September 26, 2025 | 3.3% | 3.3% |
| US PCE Price Index (YoY) | September 27, 2025 | 2.6% | 2.6% |
EUR/USD Technical Analysis
From a technical outlook, the EUR/USD pair has found support around the 1.1730 level, coinciding with an upward trend line and a demand zone. This bounce indicates continued buying interest. However, for the bullish momentum to solidify, the pair must overcome resistance near 1.1840. A prosperous breach of this level could pave the way for a retest of mid-September’s highs.
Conversely, a decline below 1.1730 could invalidate the upward scenario and signal a potential reversal. Traders are closely watching these key levels to determine their next course of action.
Did you know? The EUR/USD is the most traded currency pair globally, representing approximately 23% of all foreign exchange trading volume, according to data from the Bank for International Settlements.
Pro Tip: When analyzing currency pairs, consider using a combination of basic and technical analysis for a more informed trading decision.
Understanding currency Pair Dynamics
Currency pairs are always traded in relation to each other. The value of one currency is determined by its comparison to another. numerous factors influence exchange rates, including economic indicators, political events, and global market sentiment. Staying informed about these factors is critical for navigating the foreign exchange market successfully.
The foreign exchange market is the largest and most liquid financial market in the world, operating 24 hours a day, five days a week. This continuous trading activity creates both opportunities and risks for investors. Understanding the mechanics of the market and employing sound risk management strategies are essential for long-term success.
Frequently Asked Questions About EUR/USD
- What factors influence the EUR/USD exchange rate?
Several factors, including economic growth, interest rates, inflation, and political stability in both the Eurozone and the United States, impact the EUR/USD exchange rate.
- What is the meaning of the PCE price index?
The PCE price index is the Federal Reserve’s preferred metric for measuring inflation, providing crucial insights into monetary policy decisions.
- How can I use technical analysis to trade EUR/USD?
Technical analysis involves studying price charts and using indicators to identify potential trading opportunities based on past price movements.
- What is a basis point in the context of interest rates?
A basis point is one-hundredth of a percentage point, commonly used to describe changes in interest rates.
- Is now a good time to trade EUR/USD?
Market conditions are dynamic. Consult with a financial advisor and conduct thorough research before making any trading decisions.
What are your thoughts on the Fed’s approach to inflation? Do you believe the EUR/USD will break the 1.1840 resistance level?
Share your insights and join the conversation below!
How does the confluence of previous highs, Fibonacci retracement levels, and order book analysis strengthen the significance of the 1.1840 supply zone?
EUR/USD: Potential Mid-September Rally Triggered by Clearance of 1.1840 Supply Zone
Identifying the 1.1840 supply Zone
For weeks, the 1.1840 price level has acted as a significant resistance point for the EUR/USD pair. This isn’t merely a round number; it represents a confluence of factors creating a robust supply zone. Analyzing price action reveals:
* Previous Highs: The area around 1.1840 saw multiple failed attempts by buyers in late august and early September 2025, establishing a clear ceiling.
* Fibonacci Retracement Levels: key Fibonacci retracement levels from the recent downswing align with this zone, reinforcing its importance. Specifically,the 61.8% retracement level falls within this range.
* Order book Analysis: Institutional order book data (available through services like Bloomberg and Refinitiv) indicates substantial sell orders clustered around 1.1840, confirming the supply pressure.
Understanding these elements is crucial for EUR/USD trading and predicting potential breakouts. Traders actively monitoring forex signals have likely noted this persistent resistance.
The Significance of a Breakout
A decisive break above 1.1840 isn’t just a technical achievement; it signals a potential shift in market sentiment. Here’s what a clearance of this supply zone could mean:
- Short Covering: Traders who shorted the pair anticipating a rejection at 1.1840 will be forced to cover their positions, adding further buying pressure. This is a common catalyst for forex rallies.
- Momentum shift: Breaking through established resistance often attracts momentum traders, accelerating the upward move.
- Targeting Higher Levels: Once 1.1840 is cleared, the next significant resistance levels to watch are 1.1880 and then the psychological barrier of 1.1920. these become potential profit targets for bullish traders.
Factors Supporting a Potential Rally
Several basic and technical factors suggest a rally is plausible in mid-September 2025:
* Dollar Weakness: A slight softening of the US Dollar Index (DXY) due to dovish comments from a Federal Reserve official on September 20th provided initial support for the EUR/USD.
* Euro Strength: Positive economic data released from the Eurozone, specifically the German ZEW Economic Sentiment survey, boosted confidence in the Euro.
* Seasonal Trends: Historically, september has often been a favorable month for the Euro against the Dollar, although past performance is not indicative of future results.
* Technical indicators: The Relative Strength Index (RSI) on the daily chart is approaching oversold territory, suggesting a potential rebound. The Moving Average Convergence Divergence (MACD) is also showing signs of a bullish crossover. Technical analysis is key here.
Risk management & Trading Strategies
While the potential for a rally exists, prudent risk management is paramount. Here are some strategies to consider:
* Confirmation is Key: Don’t jump the gun. Wait for a confirmed breakout above 1.1840 with strong volume before entering a long position. A retest of 1.1840 as support after the breakout would be an ideal entry point.
* Stop-Loss Orders: Place a stop-loss order below 1.1840 to limit potential losses if the breakout fails. A conservative stop-loss could be placed around 1.1820.
* Take-profit Levels: Set realistic take-profit levels based on the identified resistance levels (1.1880 and 1.1920). Consider using a risk-reward ratio of at least 1:2.
* Position Sizing: Never risk more than 1-2% of your trading capital on a single trade. Forex risk management is crucial for long-term success.
Real-World Example: The June 2023 Breakout
In June 2023, the EUR/USD faced a similar situation with a stubborn supply zone around 1.0850. After multiple failed attempts, a strong bullish candle finally broke through the resistance, triggering a rally of over 200 pips. This demonstrates the potential power of clearing a significant supply zone. This historical example highlights the importance of EURUSD analysis.
Monitoring Key Economic Data releases
Stay informed about upcoming economic data releases that could impact the EUR/USD pair. Key events to watch include:
* ECB Monetary Policy Meeting (September 26th, 2025): Any signals regarding future interest rate hikes or quantitative easing could significantly influence the Euro.
* US GDP Data (September 28th, 2025): Strong US GDP data could strengthen the Dollar and potentially derail the rally.
* US Non-Farm Payrolls (october 4th,2025): This is a major economic indicator that frequently enough triggers significant market movements. Economic calendar awareness is vital.
Utilizing Trading Platforms & Tools
Leverage the tools available on your forex trading platform to enhance your analysis:
*
