EUR/USD Breaks 1.16 as the August Recovery Accelerates
The euro has done it: a daily close above 1.16, at 1.1682, with an intraweek high of 1.1712.
EUR/USD has now recovered every pip of the June–July decline and is trading back at levels last seen in mid-May. From the June low of 1.1325, that’s a 3.9% rally — and crucially, it’s happening while the dollar’s weakness broadens beyond just the yen.
What’s driving it now
In July, the euro’s bounce was a sympathy move — dollar down because yen up. August is different. EUR/USD is rising while USD/JPY stabilizes around 159, which means the selling is coming from dollar longs exiting across the board. The catalyst appears to be a cumulative repricing of Fed expectations: the market has slowly pushed back the expected timing of US rate cuts all year, and after July’s data, that trade is finally being unwound.
Sterling is along for the ride at 1.3654 for the week, and even the commodity currencies have stopped falling. This is what a genuine dollar correction looks like — broad, unhurried, and hated by everyone positioned the other way.
The million-dollar question
Is this the start of a dollar downtrend or a correction within the uptrend? The honest answer: check back after the Fed’s September meeting. If US data keeps softening and the Fed validates the repricing, EUR/USD has a genuine shot at 1.19–1.20 by year-end. If the data firms up, this was a 4% correction and the uptrend resumes from 1.17.
Levels: 1.1712 (May high) is the next resistance. Below, 1.1567 (last week’s low) is where the breakout bulls draw their line.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
Leave a Reply