EUR/USD has recovered in recent sessions, with the pair trading near 1.17 as broad-based weakness in the US dollar continues to dominate the foreign-exchange market. The main driver remains the shifting monetary-policy outlook, with investors focused on whether the Federal Reserve can maintain a restrictive stance while the US economy shows signs of slowing. For currency traders, that combination matters because it keeps attention on relative policy expectations rather than on any single data point, making upcoming central-bank communication especially important.

The dollar faces a key test this week as Fed Chair Kevin Warsh prepares to deliver his first speech at Jackson Hole on Friday. Persistent inflation and rising long-term Treasury yields could encourage a hawkish tone, particularly if Warsh signals that rate cuts in September are far from guaranteed. On the other hand, weaker US growth or softer inflation data would reinforce expectations for easier monetary policy and could extend the dollar's decline.

In Europe, euro-area inflation rose to 2.9% in July, keeping price pressures above the ECB's 2% target. The ECB has kept interest rates unchanged since June, but higher energy prices and renewed inflation risks could limit the scope for further easing. That leaves EUR/USD sensitive to any change in the transatlantic policy gap, especially when both sides of the pair are still being shaped by inflation and rate expectations.

With EUR/USD trading near multi-month highs, the Jackson Hole symposium and upcoming US PCE inflation data could determine whether the euro extends its advance or whether a hawkish Fed response triggers a renewed recovery in the dollar. Until then, the pair's ability to hold above recent breakout levels will remain a practical gauge of whether the move has room to continue.

Technical Analysis of EUR/USD

The daily EUR/USD chart shows that the pair has broken decisively above the descending trendline that had capped price action since the February highs, marking a significant shift in the medium-term structure.

EUR/USD is now trading around 1.1665, comfortably above both the 100-period EMA at 1.1546 and the 0.382 Fibonacci retracement at 1.1579. The breakout has also moved the pair away from the 1.1537–1.1495 support area, leaving the 1.1714 Fibonacci resistance level as the next major test.

Bullish Scenario

If buyers can hold the pair above the 1.1579 Fibonacci level and the 100-period EMA, the bullish structure remains intact.

A break above 1.1714 would open the way toward the 1.1775–1.1800 resistance zone, where previous price action has repeatedly stalled. A sustained move above this area would strengthen the case for a broader recovery and suggest that the longer-term downtrend may have been decisively reversed.

Bearish Scenario

Conversely, a rejection at 1.1714 followed by a break below 1.1579 would weaken the current setup and expose the 100-period EMA around 1.1546, which is closely aligned with the 0.5 Fibonacci level at 1.1537.

A deeper decline through this confluence would bring the 0.618 retracement at 1.1495 into focus, followed by 1.1435 and the 0.786 Fibonacci level as the next downside references.

With EUR/USD testing major Fibonacci resistance after breaking above its descending trendline, the key question is whether buyers can turn the breakout into a sustained advance toward 1.1800, or whether resistance will once again send the pair back toward its key support zone.