Fed Under Pressure: Credibility in Question, Cuts Anticipated
EURUSD could break above 1.1700 decisively as remarks from Fed’s John Williams will be critical short-term catalysts. If Williams confirms dovish leanings or flags downside risks.
The US dollar remains under broad pressure in the late morning session on August 8, pushing EURUSD higher toward 1.1670, its highest level in months. The market is now firmly pricing in three Fed rate cuts by the end of 2025, with the first move almost fully expected in September, amid a backdrop of rising US jobless claims,
Political tensions over Fed appointments, and concerns about data credibility in the wake of government interference.
A Reuters poll this week revealed growing skepticism among analysts toward the Fed’s independence, which is accelerating bearish sentiment on the US Dollar. (Reuters)
Euro Finds Tailwind from U.S.–EU Trade Deal, Dollar Retreat
The euro is drawing support not just from a softening dollar but also from improving bilateral trade dynamics. A late July U.S.–EU tariff agreement eased concerns around transatlantic relations and lifted EURUSD briefly above 1.1750.
Additionally, with no major Eurozone economic events scheduled for today, price action is being shaped almost entirely by US risk sentiment and policy clarity.
Importantly, despite lingering structural weaknesses in Germany’s industrial sector, the euro is benefiting from safe-haven flows away from USD and signs of relative stability in EU fiscal discussions.
Technical Picture: Bulls Eye 1.1700 Breakout
EURUSD remains in a bullish continuation pattern, edging higher within a rising trend channel visible on the 4H and daily charts.
Resistance Levels:
1.1700 – Psychological barrier and immediate resistance
1.1755 – Recent spike high post-U.S.–EU trade deal
1.1800 – Round number and potential target if dollar continues sliding
Support Levels:
1.1620 – Channel base and intraday floor
1.1580 – 20-day EMA and short-term pivot
1.1520 – Former resistance turned support
Moving Averages: Price above 20, 50, and 100-SMA on 4H & daily – confirms strong bullish bias
As long as EURUSD holds above 1.1620, bulls are in control. A daily close above 1.1700 would open the door to a test of 1.1750–1.1800 in coming sessions.
Conclusion
The EURUSD pair is rallying on the back of a structurally weaker US dollar, with Fed credibility now in question and rate cuts increasingly likely. While eurozone data remains subdued, external macro dynamics especially Fed political pressure and US labor softness are driving the bullish narrative.
Today’s Fed Williams speech. A dovish tilt or weak data print could send EURUSD above 1.1700, confirming a bullish breakout. On the flip side, a surprise hawkish tone could spark a pullback toward 1.1620–1.1580, but overall, the risks remain tilted to the upside.
Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult a professional advisor before making investment decisions.
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