EUR/USD Forecast: 1.1597 Pinned Under 1.1601
- 1.1597 on EUR/USD, a fraction firmer on the day, with the pair consolidating rather than trending after last week's slide.
- Euro area inflation at 3.3% in August keeps the 10 September ECB meeting live, while the Federal Reserve sits on hold with three members dissenting in favour of a hike.
- The 1.1612 moving-average band is the ceiling; 1.1560 is the floor that keeps the August breakout intact.
Fundamental Analysis: EUR/USD
Both sides of this pair now carry a tightening risk, which is why it has stopped trending. Euro area annual inflation climbed to 3.3% in August, the highest print of 2026 and a clear acceleration from the 2.8% recorded at the start of the summer. The ECB deposit rate stands at 2.25% and the main refinancing rate at 2.40% after June's increase, and the July minutes stated plainly that the pause should not be interpreted as the end of the cycle. Forward pricing has drifted toward another 25 basis points at the 10 September meeting.
The dollar side offers a mirror image rather than a contrast. The Federal Reserve held at 3.50% to 3.75% on 29 July for a fifth consecutive meeting, but three FOMC members dissented in favour of a 25 basis point increase, an unusually large hawkish minority. US annual inflation eased for a second month to 3.4% in July with the core rate at 2.5%, which is progress, but not enough to remove the risk that the September dot plot shifts higher.
That leaves a pair where neither central bank is easing and both meetings sit inside the next fortnight, with the ECB on 10 September and the FOMC on 16 September. August CPI lands on 11 September in between. The result is a market unwilling to commit capital in either direction until the calendar clears, which is exactly the range compression the chart is showing.
Technical Analysis: EUR/USD
The move that defines this chart began on 19 August, when the pair broke out of a 1.1500 to 1.1530 base and spiked to 1.1720 the following session. Everything since has been a controlled give-back: a lower high near 1.1690, another at 1.1665, then a sharp drop on 28 August that reached 1.1575. Price recovered to 1.1615 on 1 September and has spent the last three sessions oscillating in a narrow band. The moving averages have converged at 1.1598, 1.1601 and 1.1612, with the slower average trailing far below at 1.1567.
Resistance is the 1.1601 to 1.1612 average cluster, then the 1.1665 lower high above it. Support sits at 1.1560, the low printed on 2 September, with 1.1530 marking the top of the pre-breakout base. A 4-hour close below 1.1560 would put the entire 19 August breakout in question and invalidate the constructive read on the pair.
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