EUR/USD Price Forecast: Holds steady below 1.1700 as overbought momentum tempers further gains
The EUR/USD pair holds steady near 1.1680 during the early European trading hours on Monday. Fiscal interventions from the US Treasury weigh on the US Dollar (USD) against the Euro (EUR). Traders brace for details of sanctions on Iran and a policy speech this week in the United States (US).
The EUR/USD exchange rate remains steady around 1.1680 during early European trading sessions on Monday. The U.S. Treasury's fiscal interventions, including a plan to double its long-end bond buybacks to $4 billion per operation, are putting downward pressure on the U.S. Dollar (USD) relative to the Euro (EUR). Traders are keeping a close eye on the potential sanctions on Iran and a policy speech by Federal Reserve Chairman Kevin Warsh scheduled for the week.
The USD has been facing additional headwinds due to concerns over the deteriorating fiscal outlook and uncertainty regarding the Federal Reserve's policy direction. Treasury Secretary Scott Bessent is expected to address these issues in a press conference on Monday at 18:00 GMT, following his announcement of the increased buyback program.
Markets are closely monitoring whether Bessent will target China with the sanctions. The ongoing tensions between the U.S. and Iran could potentially lead to a shift back into the safety of the USD. Analysts from Commerzbank caution that policy communication will be a critical factor in the near-term EUR/USD dynamics, noting that a more hawkish stance from Fed officials at Warsh's Jackson Hole speech could further weaken the USD and create additional volatility in the Euro-Dollar exchange rate.
Currently, EUR/USD remains in a bullish near-term position, trading above the 20-day Bollinger middle band and the 100-day simple moving average (SMA). The price is approaching the upper range of the recent trading spread, sitting just under the Bollinger upper band, while the Relative Strength Index (14) indicates overbought conditions that may limit further upward momentum.
On the upside, the primary resistance level is the Bollinger upper band at 1.1705, where profit-taking might occur. On the downside, support is provided first by the 100-day SMA near 1.1575, followed by the 20-day Bollinger middle band at 1.1558, with a deeper support level at the lower Bollinger band around 1.1415.
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