EUR/USD Price Forecast: Holds steady below 1.1700 as overbought momentum tempers further gains
- EUR/USD flatlines around 1.1680 in Monday’s early European session.
- The pair maintains a constructive tone, but a temporary sell-off or consolidation cannot be ruled out amid overbought RSI momentum.
- The first upside barrier emerges at 1.1705; the initial support level is seen at 1.1575.
The EUR/USD pair holds steady near 1.1680 during the early European trading hours on Monday. Fiscal interventions from the US Treasury weigh on the US Dollar (USD) against the Euro (EUR). Traders brace for details of sanctions on Iran and a policy speech this week in the United States (US).
US Treasury Secretary Scott Bessent said on Thursday that it would double its long-end bond buybacks to $4 billion per operation to cap surging 30-year yields. The announcement came one day after the department said it will pledge to at least double the size of its buybacks of longer-dated debt in an effort to rein in bond yields.
Traders are concerned over the deteriorating fiscal outlook and uncertainty over the Federal Reserve's (Fed) policy path. This, in turn, exerts some selling pressure on the Greenback.
Bessent is scheduled to hold a press conference on Monday at 18:00 GMT after threatening "the toughest sanctions in history" on Iran, with markets focused on whether he will target China. Iran's Foreign Minister Abbas Araghchi dismissed the threat of a fresh round of US economic sanctions as a “desperate” ploy and said the expected new measures would fail to defeat Tehran, per Reuters. Ongoing tensions between the US and Iran could trigger safe-haven flows back into the Greenback.
On Friday, the attention will shift to the speech from Fed Chairman Kevin Warsh in Jackson Hole, Wyoming, for some clarity on the outlook for US interest rates. Any hawkish comments from Fed officials might help limit the USD’s losses.
Euro-Dollar traders eye Warsh tone as potential hawkish risk
Commerzbank’s analysts caution that policy communication remains a key driver for EUR-USD in the near term, highlighting that “one risk for the EUR-USD is therefore certainly that Warsh will sound more hawkish than expected on Friday.” They argue that a firmer-than-anticipated stance from the Fed official at Jackson Hole could unsettle current Dollar sentiment and inject renewed volatility into the Euro-Dollar exchange rate.
Technical Analysis: EUR/USD keeps a bullish vibe in the near term amid overbought RSI momentum
In the daily chart, EUR/USD maintains a bullish near-term bias as spot holds above the 20-day Bollinger middle band and the 100-day simple moving average (SMA). Price is pressing into the upper area of the recent range and sits just under the Bollinger upper band, while the Relative Strength Index (14) around 73 suggests overbought conditions that could temper immediate upside despite the supportive structure.
On the topside, initial resistance is located at the Bollinger upper band at 1.1705, where buyers may face profit-taking. On the downside, support is seen first at the 100-day SMA near 1.1575, followed by the 20-day Bollinger middle band at 1.1558, with a deeper structural floor at the lower Bollinger band close to 1.1415.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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