The EURUSD currency pair has seen ups and downs recently, mostly due to political developments in France and upcoming job data from the US. Following dovish remarks from Powell, the USD has regained some strength, with attention now shifting to key US figures, especially the Non-Farm Payroll report coming this Friday. Currently, there is an 89% likelihood of a rate cut in September, with expectations for a total of 55 basis points in rate cuts by the end of the year. However, strong economic data could change these odds. Earlier in the week, the French Prime Minister’s call for a confidence vote put pressure on the euro, raising fears of political instability. The European Central Bank (ECB) seems neutral about future rate cuts. Right now, the market anticipates only 9 basis points of cuts by year-end and 20 by 2026.

Technical Analysis of EURUSD

Looking at the daily chart, the EURUSD rejected a trendline around 1.1740 but found support close to 1.16. On the 4-hour chart, we saw a bounce from 1.16, with resistance around 1.1664; buyers might aim for a breakout here. The 1-hour chart shows a swing low at 1.1627 acting as support, indicating potential price volatility ahead of US data releases. Key upcoming events include US Jobless Claims and inflation data from both the Eurozone and the US. As of today, August 28th, 2025, the dollar is recovering after comments made during the Jackson Hole Symposium. The focus is now on next week’s important US Non-Farm Payrolls report. Today’s jobless claims showed a resilient labor market at 230,000, while last month’s Core PCE inflation stayed steady at 2.9%. These numbers have created uncertainty around what the Federal Reserve will do next. The strong emphasis on jobs data has set up a binary scenario, perfect for volatility-based option strategies. With an 89% chance of a rate cut in September, a strong jobs report could dramatically shift these expectations and boost the dollar. Implied volatility for one-week EURUSD options has increased to over 8%, indicating that a long straddle strategy could be a smart way to trade the anticipated price movement.

European Political Influence

In Europe, the euro is under pressure as we near the French confidence vote on September 8th. We experienced similar euro weakness during the French elections in 2022, showing how politics can impact the currency significantly. Buying short-dated, out-of-the-money EURUSD put options is a cost-effective way to protect against a potential negative outcome from Paris. There is a clear difference in policies between the central banks. Traders are expecting 55 basis points of cuts from the Fed this year but only 9 basis points of easing from the ECB. This fundamental divergence supports a stronger dollar, especially if US economic data remains solid. If the jobs report is strong, we might look to sell longer-dated EURUSD futures to take advantage of this growing policy gap. From a technical perspective, we are monitoring key support around the 1.1600 level. A clear break below this support, especially after the jobs report, could trigger us to increase our bearish positions or buy puts targeting the 1.14 level. Until that break occurs, price movements are likely to remain volatile within the current range. Create your live VT Markets account and start trading now.

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