Euro Extends Gains as Dovish Fed Signals Weigh on Dollar, Investors Eye GDP Data

Traders' Opinions

Summary:

The euro extended its recovery against the U.S. dollar on Thursday, buoyed by dovish Federal Reserve commentary and political drama in Washington, even as weak Eurozone data capped upside momentum.

BUY EURUSD

Close Time

CLOSED

1.16650

Entry Price

1.17500

1.15700

1.16495 +0.00069 +0.06%

16.2

Pips

Profit

1.15700

1.16812

Exit Price

1.16650

Entry Price

1.17500

The euro rose further against the U.S. dollar on Thursday, with the EUR/USD pair climbing from a weekly low near 1.1575 to touch an intraday high around 1.1670 as investors positioned themselves ahead of key U.S. economic data. The move came as dovish comments from a senior Federal Reserve official and renewed political drama in Washington undermined confidence in the greenback, tilting market sentiment in favor of the common currency despite lackluster Eurozone data.

The recovery gained traction late Wednesday after New York Fed President John Williams struck a notably accommodative tone in remarks to CNBC. Williams suggested that interest rates are likely to move lower over time, emphasizing that every monetary policy meeting remains “live” and that officials will remain data-dependent. His language fueled speculation that the Fed could deliver an interest rate cut as early as September—a prospect that sent U.S. Treasury yields lower and pressured the dollar across major currency pairs.

The dollar’s weakness was further compounded by President Donald Trump’s renewed confrontations with the Fed. Earlier this week, Trump attempted to dismiss Governor Lisa Cook, reportedly to pave the way for a more dovish policymaker aligned with his pro-growth agenda. While the move is unlikely to succeed in practice, it reinforced concerns about political interference at the central bank and dented the perception of Fed independence—an institutional cornerstone closely watched by investors.

The euro’s rally, however, was not built on strong fundamentals from the Eurozone itself. Economic data released Thursday highlighted ongoing fragility across the bloc. The Economic Sentiment Index slipped to 95.2 in August, down from a downwardly revised 95.7 in July and below consensus forecasts of 96. Industrial confidence also deteriorated, falling to -1.3 from -0.5, while consumer confidence remained deeply negative at -15.5. The numbers underscore a region struggling to find traction amid sluggish growth and persistent political risks.

One such risk stems from France, where opposition parties have refused to back Prime Minister Françoise Bayrou in an upcoming confidence vote scheduled for September. The standoff raises the prospect of another government collapse and snap elections, an unwelcome development for markets still digesting Europe’s political turbulence from earlier this year.

Still, the euro’s ability to rally despite weak regional data and political risks speaks volumes about the pressure weighing on the U.S. dollar. Beyond Williams’ dovish remarks, traders are also bracing for U.S. economic releases that could further shape expectations for Fed policy. Later Thursday, the Commerce Department will publish its second estimate of Q2 GDP, which economists expect to show a modest upward revision. Yet, investors may shrug off the GDP figures, focusing instead on Friday’s release of the Fed’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) Price Index—for clearer signals about the September FOMC decision.

Technical Analysis

From a technical perspective, the EUR/USD pair has broken through near-term resistance at 1.1665, with momentum indicators suggesting further upside potential. The move above the 50-day exponential moving average has relieved some of the recent bearish pressure, allowing buyers to reassert control. The pair is now trading around 1.1632, holding comfortably above short-term support levels.

The Relative Strength Index (RSI), however, has entered overbought territory, flashing a potential warning that the rally could slow in the near term. If momentum persists, the next bullish target sits near 1.1750—a level that coincides with prior swing highs and represents a key test for buyers. On the downside, initial support lies at 1.1600, followed by stronger levels at 1.1575. A sustained drop below these thresholds would revive bearish momentum and negate the current recovery.

TRADE RECOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.16650

STOP LOSS: 1.15700

TAKE PROFIT: 1.1750

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Commodity

Summary:

Gold drew support from New York Fed President John Williams, who signalled room for rate cuts and praised Governor Lisa Cook, reinforcing the metal’s safe-haven bid.

SELL XAUUSD

Close Time

CLOSED

3397.96

Entry Price

3332.00

3445.00

4211.99 +14.08 +0.34%

470.4

Pips

Loss

3332.00

3445.00

Exit Price

3397.96

Entry Price

3445.00

Fundamentals

Gold extended its positive tone on Thursday, clawing back losses triggered earlier in the week by renewed threats to Fed independence. Spot XAUUSD pierced the $3,400 level in intraday dealings, up 0.15%.

Speaking to CNBC on Wednesday, Williams said policy rates are likely to drift lower over time, though he declined to offer a timeline for the first cut. “The economy remains fundamentally strong,” he noted, echoing the FOMC’s consensus that while growth has moderated, the labour market is “solid.”

“Should incoming data evolve in line with our dual-mandate objectives, a gradual reduction in the federal-funds rate would be appropriate,” Williams said. Markets continue to price an easing cycle commencing at the 18 September FOMC meeting.

Williams, while sidestepping direct comment on President Trump’s attempt to remove Governor Lisa Cook, lauded her integrity and commitment to the central bank’s statutory mandate. He argued that Fed independence is “critical for securing low inflation and long-run economic and financial stability.”

Market watch: Investor unease over the Fed’s autonomy and the latent risk of a U.S. inflation flare-up is underpinning bullion. If the President succeeds in dismissing Cook, the administration would gain a working majority on the seven-seat Board, fuelling fears that monetary policy could be politicised and further stoking safe-haven demand for gold.

A related concern is that perceived erosion of Fed independence could prompt premature easing, eroding market confidence and ultimately re-igniting inflation pressures.

Upside Momentum Near Exhaustion; $3,400 Handle Looks Increasingly Fragile_1

Technical Analysis

On the four-hour chart, gold staged another leg higher on Thursday, breaching $3,400. Momentum indicators, however, suggest the advance is running on fumes, shifting attention toward a potential pullback to the $3,350 support zone. The market appears to be carving out a broad range around that level; a decisive break lower would open the door to a deeper retracement toward $3,335.

This bearish scenario is corroborated by the MACD: the signal line remains above the zero axis but has rolled over, while the histogram is printing a bearish divergence—classic signs that upward momentum is fading and a probe of recent lows is likely.

Trade Recommendations

Trade Direction: Sell

Entry Price: 3400

Target Price: 3332

Stop Loss: 3445

Valid Until: September 13, 2025 23:55:00

Support: 3388/3369/3359

Resistance Levels: 3405/3409/3420

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The Pound Sterling extended its rally against the US Dollar on Thursday, climbing to near 1.3520, as dovish remarks from New York Fed President John Williams weighed on the Greenback.

BUY GBPUSD

Close Time

CLOSED

1.35099

Entry Price

1.38000

1.33100

1.33153 -0.00159 -0.12%

21.9

Pips

Profit

1.33100

1.35318

Exit Price

1.35099

Entry Price

1.38000

The British Pound continued its advance against the US Dollar on Thursday, marking its third consecutive day of gains, as a softer Federal Reserve outlook undermined the Greenback and bolstered appetite for risk-sensitive currencies. The GBP/USD pair climbed toward 1.3520 in European trade, buoyed by remarks from New York Federal Reserve Bank President John Williams that reinforced expectations of imminent monetary easing in the United States.

At the time of writing, the US Dollar Index (DXY), which measures the dollar’s performance against a basket of six major peers, slipped to around 97.90, underscoring the growing bearish bias surrounding the world’s reserve currency.

Williams, speaking in an interview with CNBC, acknowledged that the U.S. economy is undergoing a period of adjustment, with slowing growth making the case for potential interest rate cuts. “Risks are more in balance. We are going to just have to see how the data play out,” he said, refraining from committing to a definitive policy shift at the Fed’s upcoming September meeting. His cautious, yet dovish, tone suggested that while officials are reluctant to pre-commit, the door remains firmly open for cuts should incoming data confirm economic weakness.

The remarks came against a backdrop of heightened political and institutional turbulence at the Fed, with Williams declining to address the recent dismissal of Governor Lisa Cook by President Donald Trump. Cook, who was accused by the administration of mortgage-related misconduct, has vowed to challenge the decision in court, adding a layer of uncertainty to the Fed’s already fragile independence at a time when monetary policy is under intense scrutiny.

The dollar’s slide reflects not only the dovish tilt in Fed communications but also mounting concerns that U.S. economic resilience may finally be fading. Investors are increasingly pricing in rate cuts over the coming months, with money markets suggesting a growing likelihood of policy easing before year-end. That expectation has undermined the Greenback’s yield advantage and redirected flows toward currencies perceived as undervalued or supported by relative stability, such as Sterling.

However, while the Fed’s hesitation is weighing on the dollar, the pound’s strength is not without its caveats. The UK economy continues to face structural challenges, from subdued growth prospects to persistent inflationary pressures, which may limit Sterling’s ability to sustain a one-sided rally. For now, though, the divergence in policy trajectories is giving the British currency the upper hand.

Technical Analysis

From a technical perspective, GBP/USD has staged a decisive rebound after defending the 1.3440 support level, which served as a springboard for the latest bullish correction. The pair has successfully broken above short-term resistance lines and escaped the gravitational pull of the 50-day Exponential Moving Average (EMA50), confirming a shift in near-term sentiment.

Momentum indicators, however, suggest the rally may be approaching a point of exhaustion. The Relative Strength Index (RSI) has surged into overbought territory, flashing potential warning signs of a pullback.

The price action aligns closely with the 50% Fibonacci retracement level of the recent downtrend, a zone that often acts as a magnet for bullish flows before a decisive breakout. We are now eyeing two critical upside targets: 1.3600, a psychological threshold that could cap the near-term advance, and 1.3800, which would mark a more significant confirmation of sustained bullish momentum.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.3510

STOP LOSS: 1.3310

TAKE PROFIT: 1.3800

Risk Warnings and Disclaimers

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Tank

Economic

Commodity

Forex

Technical Analysis

Summary:

Trump's ongoing assault on the Federal Reserve's independence and the dovish expectations for the Federal Reserve may constrain the downside potential of gold in the future.

SELL XAUUSD

Close Time

CLOSED

3408.00

Entry Price

3375.00

3439.00

4211.99 +14.08 +0.34%

310.0

Pips

Loss

3375.00

3439.02

Exit Price

3408.00

Entry Price

3439.00

Fundamentals

The probability of the Federal Reserve implementing a rate cut in September is approximately 90%, particularly following dovish remarks by New York Fed President John Williams on Wednesday. According to Reuters, Williams indicated that "interest rates may decrease at some point, but policymakers need to assess upcoming economic data to determine if a rate cut is appropriate next month." Following his comments, gold prices experienced a strong rebound on Wednesday, further supported by ongoing dramatic developments between U.S. President Donald Trump and Federal Reserve Board Member Lisa Cook. CNBC sources reported that Lisa Cook may soon file a lawsuit in response to President Trump's attempt to dismiss her. Trump's continued attacks on the Fed's independence and dovish expectations could limit downside risks for gold in the near term.

Furthermore, the ongoing escalation of the global trade conflict may sustain the safe-haven demand for gold. Mexico and Canada plan to increase tariffs on China, while India faces U.S. tariffs of 50% on Russian oil imports. Japan's chief negotiator, Ryosei Akazawa, has canceled his scheduled trip to Washington to discuss tariff issues. Chief Cabinet Secretary Hayashi Yoshimasa stated that technical disagreements have arisen, necessitating continued administrative-level negotiations. According to Kyodo News, no decision has been made regarding rescheduling the talks, although Reuters suggests Ryosei Akazawa may travel to Washington next week. Tokyo has explicitly indicated it will urge the U.S. to amend its reciprocal tariff orders and seek reductions on automotive and auto parts tariffs. The postponement of these negotiations underscores the fragility of trade talks even among close allies. Concerns over Federal Reserve autonomy and the latest U.S. tariff threats could mitigate downward pressure on gold prices, while conversely, they could be bearish for the U.S. dollar.

Technical Analysis

The 4H timeframe indicates that the gold price is oscillating above the EMA12, with an upward bias. If the price maintains support at EMA12, it is likely to surge directly toward 3400 or even 3410. Conversely, failure to hold this level may result in a decline toward the EMA200, approximately around 3352. The RSI value of 63 suggests a bullish market sentiment, but the MACD histogram's diminishing upward momentum and the potential for a death cross of the MACD line and signal line warrant caution against a possible pullback after a rally. In the 1D timeframe, the price is oscillating near the middle Bollinger Band within a triangular pattern approaching its final phase, indicating an imminent directional breakout. A break above 3452 could target 3500 or even 4000, while a fall below 3268 may lead to declines toward 3120 and 3100. The current strategy is to go short initially and then go long at the lows.

Seize Two Strategic Positions to Maximize Profit Potential in the Gold Market!_1

Seize Two Strategic Positions to Maximize Profit Potential in the Gold Market!_2

Trading Recommendations

Trading Direction: Sell

Entry Price: 3408

Target Price: 3375

Stop Loss: 3439

Support: 3375, 3350, 3300

Resistance: 3410, 3439, 3452

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

The seasonal decline in demand restricts the upward movement of oil prices. Although the short-term reductionin inventories provides some support, the extent is limited. Meanwhile, the attacks related to the Russia-Ukraine conflict have increased the risk of short-term supply disruptions, and the pace of OPEC+ production increases constrains medium-term supply. As a result, the market is mainly event-driven and highly volatile.

SELL WTI

Close Time

CLOSED

63.573

Entry Price

59.800

65.100

59.267 -0.542 -0.91%

152.7

Pips

Loss

59.800

65.103

Exit Price

63.573

Entry Price

65.100

Fundamentals

During the day, WTI crude oil continues to trade in a narrow range between $63.00 and $64.00 per barrel. Market sentiment fluctuates as investors weigh the "expectation of seasonal demand decline" against the "sudden risks on the supply side and divergent inventory data".

In the short term, the most direct drag comes from the approaching end of the U.S. summer driving season. Traders are starting to adjust their expectations for the post-holiday demand decline. Although last week's EIA report showed a reduction in inventories compared to expectations, this reduction was not sufficient to completely alleviate concerns about the seasonal demand decline, thus limiting the momentum for the bulls to continue. Overall, the current price seems to be in a consolidation phase under the pull of two forces: "short - term inventory support" and "seasonal demand decline".

On the supply side, local geopolitics and OPEC+ policy directions jointly shape market expectations. Recently, attacks on Russian refineries and export facilities in the Russia-Ukraine conflict have heightened concerns about short-term supply disruptions, posing an upward risk to prices in the short term. On the other hand, OPEC+ has continued to adjust production in recent months to compete for market share and has stated its commitment to maintaining market stability. The overall new production capacity has partially offset the tight supply situation. In other words, if the damage to Russian facilities continues to limit the processing capacity available for export, there are still conditions for oil prices to be pushed higher. If the production expansion of OPEC+ and non-OPEC countries continues, it will impose a neutral or even bearish long-term constraint on oil prices.

Technical Analysis

From the daily chart, the recent trend of WTI has been continuously testing the range between 63.00 and 65.00. The key resistance lies in the range of 64.00-65.00 (the previous high and the dense moving-average area). If there is a breakout with increasing volume and subsequent retracement for confirmation, it is expected to advance towards the range of 66.00-68.00.

On the downside, the key support below is around 60.00. If it breaks below 60.00 and continues to decline, it may test the support level at 58.70.

Trade Recommendations

Trade Direction: Sell

Entry Price: 63.90

Target Price: 59.80

Stop Loss: 65.10

Valid Until: September 11, 2025 23:00:00

Support: 63.14/ 60.00

Resistance Levels: 64.00/65.00

Risk Warnings and Disclaimers

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Tank

Economic

Forex

Technical Analysis

Summary:

The trader assesses an 87% probability of the Federal Reserve implementing a rate cut at the September policy meeting. In the Eurozone, the escalating risk of France holding early elections has constrained the euro's upward potential.

SELL EURUSD

Close Time

CLOSED

1.16400

Entry Price

1.14000

1.18300

1.16495 +0.00069 +0.06%

35.6

Pips

Loss

1.14000

1.16756

Exit Price

1.16400

Entry Price

1.18300

Fundamentals

On Wednesday, Federal Reserve official Williams expressed support for interest rate cuts but did not convey confidence in a reduction at the September policy meeting. He indicated that policymakers need to monitor economic data during the upcoming meeting. "Risks are becoming more balanced; we just need to observe how the data evolves," Williams stated. Meanwhile, traders assign an 87% probability of a rate cut at the September FOMC meeting. In the Eurozone, the risk of an early general election in France is increasing, constraining the euro's upward potential. Earlier this week, French Prime Minister François Bayrou called for a confidence vote on his €44 billion budget plan scheduled for September 8. In response, opposition parties are expected to oppose the confidence vote, potentially leading to an early parliamentary election in France.

Regarding tariffs, the U.S. has imposed tariffs of up to 50% on Indian imports, effective Wednesday, escalating tensions in U.S.-India relations. These measures include a 25% punitive tariff on oil imports from Russia. India plans to provide financial assistance to affected exporters and is committed to trade diversification by expanding into regions such as China, Latin America, and the Middle East, with key commodities like steel, aluminum, and passenger vehicles exempt from tariffs. Federal Reserve Board member Cook announced plans to initiate legal action over President Trump's attempt to dismiss her—prompting renewed debate over the independence of the Federal Reserve. Her attorneys argue that Trump's attempt is unfounded, while the Fed emphasizes that her 14-year term safeguards the long-term interests of the American people. The Federal Reserve stated that, unless a court rules otherwise before the September 16-17 meeting, her term will remain unchanged. Market reactions included stock market volatility and a weakening dollar, supporting the view of a strategic downward trend for the U.S. dollar.

Technical Analysis

In the 1D timeframe, the MACD indicator for the EURUSD shows a death cross between the MACD line and signal line, indicating waning bullish momentum. The ascending momentum histogram is gradually diminishing, with lower highs observed, while the RSI remains around 50, also exhibiting decreasing peaks. The price has not reached new highs and forms a head and shoulders top pattern, signaling a potential bearish divergence. In the short term, the market is likely to consolidate or decline. Currently, the price is supported by the middle Bollinger Band and the EMA50; holding above these levels could sustain an upward trend. A break below these supports may lead to further declines toward the lower Bollinger Band and the EMA200, approximately at 1.146 and 1.123 respectively. In the 1W timeframe, the price is oscillating upward along the EMA12 with a reduced slope, RSI at around 60, and a double top formation. The MACD shows a high-level death cross, with the MACD line and signal line approaching the zero-axis from below, indicating an ongoing correction. A break below the EMA12 could push the price down toward the middle Bollinger Band or the EMA50, around 1.14 and 1.118. It is recommended to go short at the highs in the short term.

Betrayed by France! Are the European and U.S. Markets Experiencing a Rapid Decline?_1

Betrayed by France! Are the European and U.S. Markets Experiencing a Rapid Decline?_2

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.164

Target Price: 1.14

Stop Loss: 1.183

Support: 1.159, 1.145, 1.14

Resistance: 1.17, 1.183, 1.19

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This divergence suggests waning bullish strength and raises the possibility of a trend reversal.

SELL EURUSD

Close Time

CLOSED

1.16510

Entry Price

1.16100

1.16700

1.16495 +0.00069 +0.06%

19.0

Pips

Loss

1.16100

1.16700

Exit Price

1.16510

Entry Price

1.16700

In the Eurozone, Germany’s GfK Consumer Climate Index for September fell sharply to -23.6, missing expectations of -21.5 and down from the previous reading of -21.7. This marks the third consecutive monthly decline and highlights the fragile state of household confidence in Europe’s largest economy. The report revealed a steep drop in income expectations, with concerns over potential job losses and weaker spending intentions adding to worries about the region’s uneven recovery. The deterioration in sentiment continues to weigh on the euro, reinforcing the challenges faced by policymakers as demand softens.

At the same time, political uncertainty in France is exerting additional pressure on the single currency. Prime Minister François Bayrou has tied his €44 billion budget proposal to a crucial vote of confidence in parliament, scheduled for September 8. The move has raised the risk of a government collapse or even early elections, intensifying questions about political stability in the Eurozone’s second-largest economy.

Looking ahead, Thursday’s calendar will draw close market attention. The release of Eurozone confidence surveys and the ECB Monetary Policy Meeting Accounts may offer fresh insight into the Governing Council’s latest debate over inflation and growth risks. In the U.S., weekly jobless claims will provide an early look into labor market conditions, while Friday’s Core PCE Price Index—the Fed’s preferred inflation gauge—remains the most anticipated data point of the week.

On the U.S. policy front, political interference concerns resurfaced after President Donald Trump announced plans to dismiss Fed Governor Lisa Cook. The move is seen as an effort to influence the Federal Reserve and potentially redirect monetary policy, reigniting debate over the institution’s independence. According to the CME FedWatch tool, money markets now price in an 87.2% probability of a 25-basis-point cut in September.

Meanwhile, Fed officials continue to shape market expectations. Dallas Fed President Lorie Logan stressed the need for clearer communication as the central bank weighs possible adjustments. She cautioned that focusing solely on banks’ short-term demand for reserves risks inflating the balance sheet unsustainably, and instead called for prioritizing longer-term needs through Treasury holdings.

Fed Chair Jerome Powell last Friday struck a more dovish tone, suggesting that rate cuts could come as soon as September given “rising downside risks to the labor market.” He also acknowledged that tariffs may create a temporary inflationary shock, though such effects could fade over time, potentially allowing for a less restrictive stance. Still, Powell emphasized the delicate balance: inflation risks remain skewed to the upside while employment risks are tilted to the downside.

Richmond Fed President Thomas Barkin echoed caution on Tuesday, describing the outlook as warranting only a “modest adjustment” in rates, reflecting his view of a modestly expanding economy. Against this backdrop, Treasury yields have been subdued: the 10-year yield eased two basis points to 4.246%, while U.S. real yields ticked up to 1.826%. Markets now turn their attention to Thursday’s second estimate of Q2 GDP, where expectations of 3.1% growth could support the dollar if exceeded, or reinforce a dovish outlook if missed. Bearish Momentum May Rebuild if the Pattern Repeats_1

Bearish Momentum May Rebuild if the Pattern Repeats_1

Technical Analysis

EURUSD has largely traded sideways over the past month, with price action oscillating within a defined range. However, the pair recently came under renewed pressure as it approached the 100- and 200-period moving averages, suggesting a possible repeat of earlier bearish momentum. If this pattern holds, another downside move could unfold, with the next target near 1.1600, where key support aligns. On the 1-hour chart, the 100- and 200-period moving averages are positioned at 1.1643 and 1.1651, making these levels critical to watch for potential bearish acceleration.

Momentum indicators also add weight to the downside case. The RSI has climbed to 62, nearing overbought conditions. A move closer to 70 could trigger renewed selling pressure. Additionally, a notable divergence has emerged between price and RSI: while EURUSD has set lower highs, the RSI has posted higher readings. This divergence suggests waning bullish strength and raises the possibility of a trend reversal. If confirmed, the combination of resistance at moving averages and weakening momentum could open the path for a deeper correction.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1651

Target price: 1.1610

Stop loss: 1.1670

Validity: Sep 05, 2025 15:00:00

Risk Warnings and Disclaimers

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