EUR/USD looks set to extend its upward momentum in the coming week. A quick glance at the daily chart shows a clear trend higher in 2025, and the simplest trading approach remains: trade with the trend. Even if the pair sees minor dips, the broader picture still favours euro strength, as the dollar continues to face mounting headwinds.
Why the Dollar Keeps Struggling
There are several structural reasons behind the greenback’s weakness:
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Cyclical shifts in currency trends – History shows that global currency cycles last roughly 8–10 years. The previous dollar cycle ran for 16–17 years, far longer than average. By that logic, the cycle ended in 2022, and a new euro cycle is underway.
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US policy under Trump 2.0 – Since Donald Trump’s return to power, U.S. policy has taken a sharply protectionist turn. America is increasingly viewed as less investor-friendly, which weighs on the dollar’s role as the world’s go-to currency.
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Federal Reserve under pressure – Traditionally, the Fed operates independently. But in 2025–2026, its independence could erode under Trump’s influence. With Trump favoring a weaker dollar to boost exports, the Fed may lean toward easier policy even if it risks long-term stability.
Together, these forces point to persistent dollar weakness, regardless of short-term swings.
What to Expect from Europe
The Eurozone’s calendar is light, with three scheduled speeches from ECB President Christine Lagarde. Since the central bank just held a policy meeting, fresh surprises are unlikely. Minor data releases won’t carry much weight either.
What matters more is the policy divergence between the ECB and the Fed. The ECB has already wrapped up its easing cycle, while the Fed is just starting to cut rates. This contrast continues to support the euro against the dollar.
Technical Picture
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Volatility: The 5-day average (as of Sept 14) stands at 64 pips, an “average” level. Expected Monday range: 1.1671 – 1.1799.
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Trend: The linear regression channel points firmly higher, signalling continuation of the uptrend.
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Indicators: The CCI has entered oversold territory three times, flagging potential for renewed upward movement. A bullish divergence also supports the case for further gains.
Key Support Levels:
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S1: 1.1719
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S2: 1.1658
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S3: 1.1597
Key Resistance Levels:
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R1: 1.1780
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R2: 1.1841
Trading Plan
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Above the moving average: Longs remain favoured, targeting 1.1780 and 1.1799.
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Below the moving average: Small corrective shorts toward 1.1658 may be possible but should be approached with caution.
The overall bias remains bullish. The dollar had a brief rally, but underlying forces still point toward a longer-term downtrend.
This analysis is for informational purposes only and should not be taken as direct financial advice.
