What to Know

  • EUR/USD rose to its highest level since June 15 after weak US nonfarm payrolls data weighed on the dollar.
  • The pair advanced to 1.1580 after previously trading near last month’s low of 1.1355.
  • A bullish trading view points to buying EUR/USD with a take-profit at 1.1700 and a stop-loss at 1.1490.
  • A bearish trading view points to selling EUR/USD with a take-profit at 1.1490 and a stop-loss at 1.1700.
  • The suggested trading timeline is 1-2 days.
  • The US Dollar Index dropped to $99.43, its lowest level since June 17 this year.
  • The US Dollar Index has fallen by 2% from its highest point in July this year.
  • The July jobs report showed the economy lost over 23k jobs after adding 20k in June.
  • Private payrolls grew by 30k jobs, manufacturing rose by 5k, and government payrolls dropped by 53k during the month.
  • Traders are now focused on the US consumer inflation report due Wednesday, with economists expecting headline and core inflation to soften a bit.
  • EUR/USD has moved above the 50-day Exponential Moving Average and the RSI has moved above its neutral level.
  • Some chart watchers see a bullish flag and potential upside toward the psychological level of 1.1700.

EUR/USD Gains as Dollar Weakness Broadens

EUR/USD has moved into a firmer short-term position after weak US labor market data triggered renewed pressure on the dollar. The pair climbed to its strongest level since June 15 and reached 1.1580, extending its recovery from last month’s low of 1.1355. The move reflects a market that is reassessing the strength of the US economy and the path of Federal Reserve policy as fresh inflation data approaches.

The immediate catalyst was the July nonfarm payrolls release from the Bureau of Labor Statistics, which showed a softer employment backdrop than many dollar bulls would have preferred. The US Dollar Index fell to $99.43, its lowest level since June 17 this year, and has declined by 2% from its highest point in July this year. That broad dollar retreat helped EUR/USD recover momentum and placed the pair back near levels that technical traders are watching closely.

For currency traders, the latest price action matters because EUR/USD has not simply bounced from a short-term dip. It has also moved back above notable chart levels, creating a setup in which dollar sentiment, inflation expectations, and technical momentum are all aligned as potential drivers. The pair remains sensitive to shifts in US economic data, and the coming inflation release could determine whether the latest breakout attempt continues or fades.

Weak Jobs Data Changes the Market Tone

The July employment figures added pressure to the dollar because they suggested that the US economy may be losing momentum. The economy lost over 23k jobs in July after adding 20k in June. In the previous report, the Bureau of Labor Statistics noted that the economy added 57k jobs. That sequence has encouraged market participants to question whether the labor market remains strong enough to justify a more restrictive policy stance from the Federal Reserve.

The details of the report were mixed but broadly soft. Private payrolls grew by 30k jobs, while manufacturing rose by 5k. Government payrolls fell by 53k during the month, creating a drag on the headline figure. The weaker public-sector employment component contributed to the overall negative number and reinforced the market’s focus on whether hiring conditions are cooling more quickly than policymakers expected.

These figures also challenged the more optimistic view of US growth. Much of the stronger growth narrative has been connected to the technology industry, where major companies such as Meta Platforms, Microsoft, and Amazon have been spending heavily on data center construction. While that activity remains an important support for parts of the economy, the labor data suggested that broader employment momentum is less convincing.

For EUR/USD, softer US labor data typically matters because it can reduce demand for the dollar if traders believe the Federal Reserve has less room to tighten policy. When US yields and rate expectations come under pressure, the euro can benefit, particularly if the European side of the pair is not facing a fresh negative catalyst at the same time. That is the backdrop behind the latest EUR/USD rebound.

US CPI Becomes the Next Major Test

The next major event for EUR/USD is the US consumer inflation report due Wednesday. Economists expect the data to show that both headline and core inflation softened a bit last month. If the numbers confirm that inflation pressure is easing, dollar weakness could continue, especially after the disappointing jobs release. If inflation proves stickier than expected, the dollar could regain support and challenge the pair’s bullish setup.

Inflation remains central because it has stayed above the 2% target of the Federal Reserve in the last five years. That persistent overshoot has kept the central bank under pressure to offer a clearer signal on what to expect this year. Some analysts expect the bank to hike, while others see it leaving rates unchanged. This split in expectations makes the CPI release especially important for short-term foreign exchange positioning.

The market reaction may depend not only on whether inflation softens, but also on whether the details suggest a durable slowdown. A softer reading could strengthen the view that the Federal Reserve may have less need to tighten further. A firmer reading could complicate that view and support the argument that policy must remain restrictive. EUR/USD is therefore entering the CPI release with both a favorable technical backdrop and a significant event risk.

Traders are also monitoring geopolitical developments in the Middle East, where Iran has placed conditions on reopening the Strait of Hormuz. While EUR/USD is primarily driven by monetary policy expectations and relative economic performance, geopolitical risk can still affect dollar demand through safe-haven flows and broader market sentiment. Any escalation or easing of tensions could influence the tone across currency markets.

Technical Setup Favors Bulls, but Risk Remains

The daily chart shows that EUR/USD has been crawling higher over the past few weeks, rising from a low of 1.1355 on July 28 to 1.1560. That recovery has created a more constructive technical picture. The pair formed a double-bottom pattern and moved above the neckline at 1.1481, which was its highest level on July 15. For chart-focused traders, a move above a double-bottom neckline often signals that downside pressure has weakened and that a broader recovery may be developing.

The pair is also in the process of forming a bullish flag pattern. This pattern usually appears after an upward move and can suggest a continuation if price breaks higher. In this case, the flag formation has arrived after EUR/USD recovered from the July 28 low and pushed above the earlier neckline. That has encouraged some chart watchers to look for a potential bullish breakout toward 1.1700.

Momentum indicators are also improving. EUR/USD has jumped above the 50-day Exponential Moving Average, a level many technical traders use to assess the direction of the medium-term trend. The Relative Strength Index has also moved above its neutral level, showing that momentum has improved from the weaker conditions seen earlier. These signals do not guarantee a breakout, but they add support to the bullish interpretation.

The bullish trading view centers on buying EUR/USD with a take-profit at 1.1700 and a stop-loss at 1.1490 over a 1-2 day timeline. This setup reflects the view that the pair can continue rising if dollar weakness persists and technical momentum carries through. The bearish trading view, by contrast, points to selling EUR/USD with a take-profit at 1.1490 and a stop-loss at 1.1700. That scenario would become more relevant if CPI revives dollar strength or if the pair fails to sustain its move above key support levels.

Why 1.1700 Matters for EUR/USD

The 1.1700 level stands out because it is a psychological target and a clear reference point for traders assessing the strength of the rebound. Psychological levels often attract attention because many participants cluster orders around them, including take-profit instructions, breakout entries, and defensive stops. If EUR/USD approaches 1.1700, the market may become more sensitive to momentum signals and incoming macroeconomic headlines.

A sustained move toward that level would suggest that traders are willing to extend the euro’s rally despite event risk from CPI and geopolitical uncertainty. It would also imply that the dollar remains under pressure after the labor market disappointment. However, failure to build on the current setup could bring attention back to 1.1490, especially if inflation data comes in hotter than expected or if risk sentiment shifts in favor of the dollar.

For now, the balance of evidence leans bullish, but the setup is not without risk. The jobs data weakened the dollar, the technical structure has improved, and the pair has moved above important chart markers. At the same time, the CPI report remains a major catalyst that could quickly reshape expectations for the Federal Reserve. That makes EUR/USD a high-attention pair in the near term, with traders watching whether bullish momentum can survive the next inflation test.

Frequently Asked Questions (FAQs)

Why did EUR/USD rise recently?

EUR/USD rose after weak US nonfarm payrolls data pressured the dollar. The pair climbed to 1.1580 and reached its highest level since June 15 as traders reassessed US economic momentum.

What is the bullish EUR/USD trading view?

The bullish view is to buy EUR/USD with a take-profit at 1.1700 and a stop-loss at 1.1490. The suggested timeline for this setup is 1-2 days.

What is the bearish EUR/USD trading view?

The bearish view is to sell EUR/USD with a take-profit at 1.1490 and a stop-loss at 1.1700. This scenario would become more relevant if the pair fails to maintain upside momentum.

What did the latest US jobs report show?

The July report showed that the economy lost over 23k jobs after adding 20k in June. Private payrolls rose by 30k, manufacturing added 5k, and government payrolls dropped by 53k.

Why is the US CPI report important for EUR/USD?

The CPI report is important because it can influence expectations for Federal Reserve policy. Economists expect headline and core inflation to soften a bit, and that outcome could affect dollar demand.

What does the 1.1700 level mean for EUR/USD?

The 1.1700 level is a psychological target watched by traders. A move toward it would support the bullish case, while failure to advance could shift attention back toward lower support levels.

What technical patterns are traders watching?

Technical traders are watching a double-bottom pattern and a bullish flag. EUR/USD has also moved above the 50-day Exponential Moving Average, while the RSI has moved above its neutral level.

Could EUR/USD still fall despite the bullish setup?

Yes. EUR/USD could fall if US inflation data strengthens the dollar, if the pair fails to hold key technical levels, or if broader market sentiment shifts in favor of dollar demand.

Photo by Ibrahim Boran on Pexels