Chart of the week – EURUSD technical analysis points to a bullish outlook

Since hitting a 52-week high of 1.1830 on 1 July 2025 for the EUR/USD, it had staged a drop of -3.7% to print a two-month low of 1.1392 on 1 August.

Despite the corrective decline of -3.7%, the technical structure of a medium-term uptrend phase of the EUR/USD has remained intact since the start of 2025, supported by a relative improvement in Germany's economic growth, which is represented by the spread between Germany’s Manufacturing PMI and the US ISM Services PMI.

The spread has narrowed to -1.00 in July 2025 from -7.80 in January 2025, which suggests a relative improvement in Germany’s economic growth momentum, in turn, increasing the odds that the European Central Bank (ECB) is likely to be approaching the end of its monetary easing cycle after eight interest rate cuts in the past year (see Fig. 1)

Let’s focus on the latest technical elements of the EUR/USD to determine its next probable multi-week directional bias after US Fed Chair Powell’s Jackson Hole dovish speech that led to a jump of 1.2% in the EUR/USD last Friday, 22 August.

Firstly, the price action of the EUR/USD has rebounded to trade back above its 20-day and 50-day moving averages.

Secondly, the 4-hour RSI momentum indicator of the EUR/USD has staged a bullish momentum breakout condition above its former parallel descending resistance last Friday.

Thirdly, the yield spread between the 2-year German Bund and the US Treasury Note, which are more sensitive to potential changes in monetary policy stances of the ECB and Fed, has increased to -1.74% at the time of writing from -2% on 1 August.

The narrowing of the negative yield spread between the 2-year German Bund and the US Treasury Note suggests that US sovereign fixed income instruments are getting less attractive in terms of yields.

Hence, these latest technical elements support a potential fresh bullish impulsive up move sequence on the EUR/USD (see Fig. 2).

Bullish bias with 1.1570/1.1530 as the key medium-term pivotal support on the EUR/USD, and a clearance above the 1.1745 intermediate resistance may see the next resistances coming in at 1.1830, followed by 1.1910.

On the other hand, a break below 1.1530 negates the bullish tone for a slide to expose the next medium-term support at 1.1400/1.1370 (also the ascending trendline from 3 February 2025 low).