Introduction
The EUR/USD currency pair, one of the most actively traded instruments in the global foreign exchange market, has seen a modest rebound in early August 2025 after recent downside pressure. While this short-term recovery is attracting attention from both retail and institutional traders, technical indicators suggest that the pair may face formidable resistance near the 1.1650 level. This level has historically served as a decisive barrier for bullish momentum and now returns as a key inflection point for the euro against the US dollar.
As the global forex landscape remains volatile, driven by geopolitical shifts, interest rate expectations, and economic uncertainty across both the Eurozone and the United States, technical traders are sharpening their focus on support and resistance levels, trend formations, and oscillator behavior. This article delves deep into the technical profile of EUR/USD, highlighting the potential implications of the 1.1650 resistance cap and what it could mean for traders in the coming weeks.
Current Price Action: Recovery In Motion But Fragile
Following a decline that extended through late July, the EUR/USD pair found a tentative base around the 1.1500 mark. Since then, modest buying pressure has pushed the pair upward, with price climbing above 1.1550 and briefly approaching 1.1600 in recent sessions. This movement has been fueled by a slight weakening in the US dollar amid softening inflation data and a more cautious tone from Federal Reserve officials regarding future rate hikes.
On the euro side, recent economic reports have been mixed, with industrial output slightly underperforming expectations but core inflation showing resilience. These data points have led to speculation that the European Central Bank may maintain a neutral stance in the short term, which in turn has provided limited upside to the euro. Nevertheless, the price action is primarily being driven by technical repositioning rather than strong fundamental conviction.
Resistance At 1.1650: The Technical Barrier Traders Are Watching
The 1.1650 price level holds psychological and technical significance in the EUR/USD chart. In prior months, particularly in April and June 2025, this area acted as a resistance zone, repeatedly rejecting bullish advances. The confluence of this level with the upper bound of a descending channel also amplifies its relevance as a technical barrier.
From a chartist perspective, the 1.1650 level aligns with the 50 percent Fibonacci retracement drawn from the April high of 1.1900 to the July low near 1.1500. This suggests that any further move upward will be met with significant seller interest. Moreover, several moving averages—including the 100-day exponential moving average—are currently converging near this level, reinforcing its role as resistance.
If EUR/USD can breach and hold above 1.1650, it could open the door for further gains toward 1.1700 or even 1.1750 in the medium term. However, the more probable scenario, according to multiple indicators, is a pullback or consolidation phase triggered by rejection at this cap.
Momentum Indicators: RSI And MACD Signal Potential Fatigue
The relative strength index (RSI) on the daily chart is currently hovering around 58, which indicates moderate bullish momentum but also shows signs of tapering. Historically, RSI readings above 60 have led to sharp profit-taking events in this pair, especially when aligned with key resistance levels.
Meanwhile, the Moving Average Convergence Divergence (MACD) histogram is still in positive territory, though the bullish signal is weakening. The MACD line is flattening out and may cross below the signal line if buying pressure does not intensify. This would suggest that upside momentum is losing steam, supporting the view that 1.1650 could act as a ceiling in the near term.
Support Zones To Monitor: 1.1580, 1.1530, And 1.1500
Should the pair fail to break above 1.1650, traders will shift their focus toward key support levels that could either stabilize the pair or lead to deeper declines. The first level of interest is 1.1580, which has been tested twice in the last week and has so far held as intraday support.
If that level fails to provide a floor, the next area to watch is 1.1530, a previous consolidation zone that acted as a launchpad during the current recovery. A drop below this level could expose the July low at 1.1500. This final zone represents a crucial threshold for bullish traders; a breakdown below it would signal a possible return to the broader downtrend established in Q2 2025.
Fundamental Crosswinds: US Dollar Remains The Key Driver
While technicals are at the forefront of current market discussions, fundamental developments continue to exert underlying influence on EUR/USD behavior. The US dollar has seen mixed performance in recent weeks due to evolving expectations around the Federal Reserve’s rate trajectory.
The latest Non-Farm Payrolls (NFP) data showed a slowdown in job growth, leading many analysts to speculate that the Fed may pause its tightening cycle. This has weakened the dollar slightly, giving the euro breathing room to stage a recovery. However, other metrics such as wage inflation and consumer spending remain strong, suggesting that any dovish pivot may be short-lived.
On the European front, concerns persist around stagnation in key economies such as Germany and France. Although headline inflation has moderated, core prices remain sticky, limiting the ECB’s ability to ease policy significantly. This results in a scenario where neither central bank is likely to aggressively hike or cut, keeping EUR/USD in a range-bound structure unless a significant economic surprise disrupts the balance.
Price Forecast Scenarios For August 2025
Bullish Case: Break Above 1.1650
If the euro can decisively break above the 1.1650 resistance zone, it would likely attract follow-through buying. In this scenario, price could climb toward 1.1700 and even 1.1750 over the following weeks. However, such a move would require supportive economic data from the Eurozone and a weakening dollar, possibly driven by disappointing US data or risk-on market sentiment.
Bearish Case: Rejection and Pullback
If price is rejected at 1.1650 and bearish momentum picks up, we could see a retracement back to 1.1530 or lower. A break of the 1.1500 level would reinforce bearish sentiment and expose the pair to a drop toward the 1.1450 and 1.1400 levels by mid to late August.
Sideways Case: Range Consolidation
Given current macro uncertainties, the most probable outcome may be continued sideways action between 1.1500 and 1.1650. This would reflect a wait-and-see approach by traders awaiting more clarity on interest rate policy or economic trajectory from both continents.
Institutional Sentiment And Order Flow Insights
Large traders, including hedge funds and commercial players, have adjusted their positioning slightly, as reflected in the latest Commitments of Traders (COT) report. Net long positions in the euro have declined marginally, while US dollar bullish bets remain steady. This implies cautious optimism toward the dollar and less conviction on a sustained euro rally.
Volume analysis also shows that buying interest weakens as the price approaches 1.1650, confirming it as a low-volume high. This is another sign that the resistance level may hold unless an external catalyst provides strong momentum.
The Role Of Geopolitical Events And Risk Sentiment
In the broader picture, geopolitical developments such as the ongoing US-China trade standoff and tensions in Eastern Europe continue to affect market risk appetite. Any escalation in these areas could lead to a flight to safety, favoring the US dollar and putting pressure on the euro.
At the same time, equity markets remain elevated, suggesting complacency in risk pricing. A sharp correction in equities could translate to stronger USD flows, pushing EUR/USD lower. Traders should monitor cross-asset correlations closely, particularly movements in the US 10-year Treasury yield and major global indices.
Conclusion
The EUR/USD is in the middle of a cautious rebound, having recovered from its July lows. However, the 1.1650 resistance level remains a formidable barrier to further gains. Momentum indicators show early signs of exhaustion, and unless bulls can muster enough strength to clear this technical hurdle, the pair is likely to retrace or enter consolidation mode.
Traders are advised to approach the market with a balanced mindset. For short-term players, the 1.1650 level offers a logical take-profit zone or a short entry on rejection signals. For longer-term investors, only a confirmed breakout above this level would shift the bias to a more sustained bullish trend.
As always, traders should monitor key economic releases, particularly US inflation and European growth data, as well as central bank commentary. In such a delicate technical and fundamental landscape, discipline, patience, and risk management will be essential.