Euro’s Performance

The Euro has pulled back from its recent highs, and the US Dollar has made a small recovery as we await US Jobless Claims data. The US Dollar had weakened due to worries about stagflation and possible interest rate cuts by the Federal Reserve. The EUR/USD pair is currently seeing upward pressure, aiming for levels around 1.1700 and 1.1745. For three days, the Euro has been on the rise, boosted by positive peace talks in Ukraine, even with disappointing German data. Concerns about an economic slowdown in the US have also been impacting the US Dollar. Recently, the Euro increased from just under 1.1400 to the mid 1.1600s and continues to gain slightly, trading at 1.1665 before the US market opens. Support came for the Euro from a meeting between US envoy Steve Witkoff and Russian President Vladimir Putin. Meanwhile, the US Dollar remains cautious as economic data strengthens expectations for upcoming Federal Reserve rate cuts. The expected rise in US Jobless Claims by 3,000 to 221,000 will be closely monitored, especially after previous weaker job numbers. A disappointing reading could put further pressure on the US Dollar due to labor market worries. German data revealed a 1.9% decrease in Industrial Production and a shrinking trade surplus, yet the Euro’s reaction was minor. The EUR/USD is gaining strength now that it has passed 1.1600, with bullish targets set between 1.1700 and 1.1710.

US Dollar and Euro Outlook

US President Trump’s trade policies and macroeconomic data have not favored the US Dollar, while recent German economic reports haven’t significantly impacted the Euro. We are focusing on immediate technical supports and resistances, as the US Dollar is closely connected to how Jobless Claims are interpreted. Although the Euro is pulling back slightly, we see this as just a short pause in a larger upward trend against the US Dollar. The market is anticipating a weakening US economy, pushing the EUR/USD toward the 1.1700 level. Traders should consider any dips as potential buying opportunities in the near future. We believe the US Dollar’s weakness is valid and likely to persist. The latest US jobless claims data for the week ending August 2nd, 2025, reached 224,000, indicating a gradual easing in the labor market since the second quarter. This confirms market expectations that the Federal Reserve will cut interest rates at its September meeting, with futures markets estimating over a 70% likelihood. On the flip side, the Euro remains strong despite some mixed signals from Germany. The market seems to be focusing on the policy difference between a dovish Fed and a more neutral European Central Bank. This situation is similar to what we saw in late 2019, when US growth concerns outweighed issues in Europe, benefiting the Euro. Considering this outlook, we are preparing for further strength in the EUR/USD. We are eyeing call options with strike prices at 1.1700 and 1.1750, aiming for the highs mentioned in recent analyses. The previous resistance around 1.1600 is expected to serve as solid support for any short-term pullbacks. Upcoming US economic data will be crucial in confirming this trend. Another weak jobs report or inflation data hinting at stagflation could push the dollar down further. We will be watching these figures closely to increase our long Euro positions. Create your live VT Markets account and start trading now.

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