EUR/USD began the New York session near 1.1090
EUR/USD began the New York session near 1.1090, but early in the trading hours, the pair dipped below 1.1080 as short-term selling pressure dominated. However, buyers stepped in quickly to defend the level, showing that demand for the euro remains strong at these price points. A combination of factors, including tighter bond spreads between Germany and the United States, helped lift the euro. Additionally, a weaker US dollar throughout the day provided further support for EUR/USD, pushing the pair up to a session high of 1.1102 on the EBS platform. This rise, however, was short-lived, and despite favorable market conditions—such as gains in equities, gold, and a drop in USD/CNH—the euro dropped below 1.1080 again later in the session.
This move back below 1.1080 was influenced by downward pressure on EUR/USD due to a decline in EUR/JPY, which fell to 155.65. The weakness in the euro against the yen added a drag on EUR/USD. Despite this, the pair managed to stay in positive territory, closing the session up +0.07%, which indicates that while there is downside pressure, the broader trend remains bullish. The positive performance of equities and gold suggests that the risk appetite remains strong, which usually supports the euro. Nonetheless, the decline in EUR/JPY signals some underlying caution in the market, with traders possibly positioning themselves ahead of key risk events next week.
From a technical standpoint, EUR/USD maintains a bullish structure. The pair is trading above the 5-day moving average, which is a positive short-term signal. Additionally, the daily and monthly RSI readings continue to rise, showing increasing bullish momentum. The presence of a bull flag pattern on the daily chart also reinforces the positive outlook, as this is typically a continuation pattern that suggests further upside once the consolidation period is over. However, traders should be cautious as key events loom. Next week, the Federal Reserve will announce its rate decision, and Fed Chair Jerome Powell’s press conference could inject significant volatility into the markets. Moreover, the release of US August retail sales data could serve as a critical factor influencing USD strength or weakness, with potential risks for EUR/USD’s bullish trend depending on how the data and the Fed decision play out.
