EUR/USD Market Analysis: Fed Hold, Data Risks
BY Eleni Antoniou
|August 4, 2026EUR/USD enters the first full week of August near a technical decision area after a slightly heavy July. The currency pair is trading around 1.1500 on the 4th August, between support at 1.1475 and resistance at 1.1575. The next one to two weeks are likely to be driven by the aftermath of the Federal Reserve's July decision, incoming US activity and labour data, the August 12 US CPI release, and any change in the European Central Bank's cautious policy message.
EUR/USD market overview
EUR/USD lost momentum through June and July after failing to sustain earlier gains. By late July, price action has compressed into a narrower range.
The policy backdrop is mixed. The ECB kept its three key rates unchanged on 23 July, leaving the deposit facility at 2.25%, the main refinancing rate at 2.40% and the marginal lending facility at 2.65%. It retained a data-dependent, meeting-by-meeting stance while emphasizing uncertainty around energy prices and inflation.
The Fed also held rates on 29 July, maintaining the federal funds target range at 3.50%-3.75%. However, the 9-3 vote included three preferences for a 25-basis-point increase. That dissent, together with the statement that inflation remains elevated, limits the case for a straightforwardly dovish interpretation.
Latest EUR/USD market news
The July Fed decision is the most important new development since the previous EUR/USD report. Holding rates was broadly consistent with a cautious policy stance, but three dissents for a hike signalled that inflation risks still have meaningful weight inside the committee. For EUR/USD, that can support the dollar through Treasury yields if markets see a higher probability of tighter policy later in 2026.
US growth and inflation evidence also point in different directions. Reporting available after the meeting put second-quarter US growth at a 1.5% annualized rate, slower than in the first quarter. At the same time, the PCE price index was reported at 3.7% year on year and core PCE at 3.3%. Slower growth can weaken the dollar if it reduces expected policy tightening, but sticky inflation can have the opposite effect by keeping US yields elevated.
On the euro side, the ECB's July hold did not deliver a strong directional signal. Euro area annual inflation had slowed to 2.8% in June from 3.2% in May, but it remained above the ECB's 2% target. The euro may therefore remain sensitive to whether incoming data point to further disinflation or renewed pressure from energy costs.
The early-August calendar is concentrated on the United States. Traders may watch ISM manufacturing on 3 August, job openings on 4 August, ADP employment and ISM services on 5 August, the official US employment report on 7 August, and US CPI on 12 August. These releases can quickly alter Fed expectations and the US-euro yield spread.
EUR/USD technical analysis
The short-term EUR/USD technical analysis remains neutral-to-mildly bearish.
Immediate support is around 1.1475, with the stronger support zone sitting around 1.1365-1.1325, near the late-June low area.
Initial resistance is around 1.1575. Above that, 1.1625 is the more important breakout area because it is a significant point of control for the last years price action.
The 50-day moving average is sloping downwards, indicting that bearish moment may still be present. However, price is trading above it, and it is to be seen whether it acts as a dynamic support area.
Fundamental and macro drivers
The relative Fed-ECB policy outlook remains the core EUR/USD driver. The Fed's nominal policy range is above the ECB's key rates, and three July dissents for a hike keep the US side comparatively firm. If US inflation or labour data stay strong, markets may price a more restrictive Fed path, supporting the dollar and weighing on EUR/USD.
The euro can still benefit if the ECB remains alert to above-target inflation while US growth loses momentum. A combination of softer US activity data, easing Treasury yields and stable euro area inflation would narrow the expected policy gap and make a recovery through the mid-1.14s more plausible.
Energy prices are a two-sided risk. Higher energy costs can lift euro area inflation and support expectations of a firmer ECB stance, but the euro area is also exposed to imported-energy costs and weaker growth. A renewed energy shock may therefore hurt the euro through the growth channel even if it complicates ECB policy.
Risk sentiment also matters. Broad US dollar weakness and stable equity markets supported other major currencies after the Fed meeting, while renewed geopolitical stress or a sharp rise in Treasury yields could restore defensive demand for the dollar.
EUR/USD price forecast: bullish scenario
A bullish EUR/USD scenario may gain support if the pair holds above 1.1625 and then 50-day moving average turns upwards. Softer US employment, services or CPI data would strengthen the path if they reduce expectations of further Fed tightening and pull Treasury yields lower.
A sustained move above 1.1850 would suggest that this years sequence of lower highs and lower lows is losing influence. The constructive case would lose momentum if price quickly falls back below 1.1475, back in to July’s consolidation zone.
EUR/USD price forecast: bearish scenario
A bearish EUR/USD scenario may develop if the pair fails below 1.1475 and closes under the 50-day moving average. Strong US data, sticky CPI, higher Treasury yields or renewed safe-haven demand for the dollar would reinforce this outcome.
A confirmed break below 1.1325 would undercut the late-June support zone and may put 1.1200 in focus. If selling extends through 1.1325. The bearish case would weaken if EUR/USD retests 1.1475 and rallies to 1.1575.
Key EUR/USD levels and catalysts to watch
- Support: 1.1475, then 1.1365, followed by 1.1325.
- Resistance: 1.1575, then 1.1625.
- US catalysts: Job openings on 4 August; ADP employment and ISM services on 5 August; the official employment report on 7 August; CPI on 12 August.
- Euro catalysts: ECB communication, euro area inflation and activity follow-through, and changes in energy-price expectations.
Conclusion
EUR/USD market analysis points to a pair caught between late-July support and a still-restrictive US policy backdrop. The Fed held rates on 29 July, but three dissents for a hike and firm inflation evidence limit the scope for a clean dollar-bearish conclusion. The ECB also remains cautious as euro area inflation stays above target and energy uncertainty complicates the outlook.
For the next one to two weeks, 1.1325 is the significant support zone and 1.1625 is the key resistance zone. Until then, the EUR/USD trading outlook remains event-driven, with US labour data and CPI likely to be the most important scheduled catalysts.
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Authors BIO
Eleni is a financial markets enthusiast contributing to content covering forex, indices, commodities, and global market developments. She is passionate about researching market-related topics and helping make financial information more accessible to traders.
