The EURUSD experienced fluctuations, largely due to French political events and upcoming US labour market data. The recent gentle approach from Powell has helped the USD recover some losses, shifting attention to upcoming US data, especially the Non-Farm Payroll report on Friday. Currently, there is an 89% chance of a September rate cut and 55 basis points of easing by year-end; strong data may change these probabilities. The French Prime Minister’s call for a vote of confidence put pressure on the EUR earlier in the week, with concerns about political instability. The European Central Bank (ECB) seems neutral on further rate cuts, with market expectations at 9 basis points of easing by year-end and 20 basis points by 2026.

Technical Analysis of EURUSD

On the daily chart, the EURUSD rejected a trendline around 1.1740 and found support near 1.16. On the 4-hour chart, a bounce from 1.16 was observed, with potential resistance at 1.1664, while buyers might seek a breakout. On the 1-hour chart, the low point at 1.1627 serves as support, with potential price fluctuations during upcoming US data releases. Upcoming catalysts include US Jobless Claims data and Eurozone and US inflation figures. As of today, August 28th, 2025, the dollar has regained its footing following comments from the Jackson Hole Symposium. The market’s attention is now focused on next week’s crucial US Non-Farm Payrolls report, especially after today’s jobless claims showed a resilient labor market at 230,000 and last month’s Core Personal Consumption Expenditures inflation remained steady at 2.9%. These figures are creating real uncertainty around the Federal Reserve’s next move. The intense focus on the jobs data has led to a situation where outcomes are viewed as either good or bad, which is ideal for trading strategies based on market fluctuations. With markets pricing an 89% chance of a rate cut in September, a strong jobs number could quickly change those odds and boost the dollar. We’ve seen implied volatility on one-week EURUSD options rise to over 8% in anticipation, suggesting that a combined strategy could be an effective way to trade the expected price swing.

European Political Influence

On the European side, the euro is being weighed down by the upcoming French confidence vote on September 8th. We saw similar euro weakness during the French election cycle back in 2022, reminding us how sensitive the currency is to political instability. Buying short-dated, out-of-the-money EURUSD put options offers a low-cost way to hedge against a negative surprise from Paris. There is a clear policy divergence between central banks, with traders expecting 55 basis points of cuts from the Fed this year while pricing just 9 basis points of easing from the ECB. This fundamental difference supports a stronger dollar, particularly if US economic data holds up. If the jobs report is strong, we would consider selling longer-dated EURUSD futures to capitalize on this widening policy gap. From a technical standpoint, we are watching the key support around the 1.1600 level. A decisive break below this support, especially after the jobs report, would likely be our trigger to add to bearish positions or buy puts targeting the 1.14 handle. Until that break happens, the price is likely to remain choppy within the current range. Create your live VT Markets account and start trading now.

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