Dollar regains strength as hawkish Fed signal puts EURUSD under pressure

Comments from the Federal Reserve chairman provided additional support for the USD, with the EURUSD rate currently standing at 1.1590. For more details, see our analysis for 31 August 2026.

EURUSD forecast: key takeaways

• The market has significantly raised expectations of a Federal Reserve interest rate hike in September
• Inflation risks persist in the eurozone
• EURUSD forecast for 31 August 2026: 1.1570 and 1.1655

Fundamental analysis

The EURUSD forecast takes into account that the pair continues its corrective wave after the previous rise and is testing the 1.1590 level.

Following the Federal Reserve chairman’s speech, the market significantly raised expectations of a September rate hike, with the probability of a 25-basis-point increase up to around 57–60%. This became the main fundamental factor weighing on the euro. Warsh stressed that inflation remains too high and financial conditions are not restrictive enough. This reassessment of expectations increases the US dollar’s interest rate advantage.

Inflation risks persist in the eurozone, including those related to rising energy costs. Against this backdrop, the market continues to price in the possibility of an ECB rate hike in September, limiting pressure on the EURUSD pair from a stronger US dollar.

Market attention is shifting to the key triggers of the week: US Nonfarm Payrolls, unemployment, and wage data. These figures could confirm or challenge expectations of a Federal Reserve rate hike in September. Fresh eurozone inflation data is also due and will be crucial for the ECB’s future policy.

The forecast for 31 August 2026 suggests that the Federal Reserve’s hawkish signal and rising rate hike expectations are putting pressure on the euro, while high inflation and energy risks continue to support the possibility of monetary policy tightening by the ECB. The key test for the US dollar’s current advantage will be US labour market data and eurozone inflation.

Technical outlook

On the H4 chart, the EURUSD pair formed an Engulfing reversal pattern near the lower Bollinger Band. At this stage, the price may form an upward wave as the signal plays out, with the upside target at the 1.1655 resistance level. A breakout above this mark would open the way for the uptrend to continue.

At the same time, today’s EURUSD forecast also suggests another scenario. The price may continue the correction and test the 1.1570 support level before rising.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (intraday)
• Trend: bullish
• Key resistance levels: 1.1600 and 1.1655
• Key support levels: 1.1570 and 1.1520

EURUSD trading scenarios for today

Main scenario (Buy Stop)

A breakout above the 1.1600 resistance level would create conditions for opening long positions and indicate an upward wave.

• Current price: 1.1590
• Entry price: 1.1600
• Stop loss: 1.1575
• Take profit: 1.1655
• Risk-to-reward ratio: more than 1:2

Alternative scenario (Sell Stop)

A breakout below the support level, followed by consolidation below 1.1570, would indicate increased bearish pressure and a continued corrective wave.

• Entry level: 1.1570
• Stop loss: 1.1590
• Take profit: 1.1520
• Risk-to-reward ratio: more than 1:2

The trade idea is valid until 08:00 AM on 1 September 2026 (server time, UTC+3).

Risk factors

The main risk to the EURUSD bullish scenario is a more hawkish Federal Reserve stance, which, amid accelerating inflation, could trigger another wave of US dollar strength. An additional factor is monetary policy easing by the ECB.

Summary

Following comments from the Federal Reserve chairman, the euro lost ground. At the same time, EURUSD technical analysis suggests a rise towards 1.1655.

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