- EUR/USD holds near 1.1555 as the euro retains much of its recent advance against the US Dollar.
- Eurozone Sentix Investor Confidence jumped to +0.9 in August from -3.1, returning to positive territory and adding to signs of improving sentiment across the bloc.
- Weak US payrolls remain a major drag on the Dollar, while 1.1600 is emerging as the key resistance level for EUR/USD.
EUR/USD held above 1.1550 on Monday, extending the recovery that gathered pace following last week’s surprisingly weak US employment report. The pair was trading near 1.1555 at the time of writing, keeping it close to recent highs as investors reassessed the outlook for the Federal Reserve and the US Dollar.
The euro received an additional boost from fresh Eurozone data after the Sentix Investor Confidence Index beat expectations in August and returned to positive territory. The improvement gives EUR/USD another source of support beyond Dollar weakness and comes as traders assess whether the Eurozone economy is entering the second half of 2026 on firmer footing.
Eurozone Sentix Investor Confidence Beats Expectations
Eurozone investor sentiment improved more sharply than expected in August, with the Sentix Investor Confidence Index rising to +0.9 from -3.1 in July. The return to positive territory represents a notable improvement in investor perceptions of the region’s economic outlook after sentiment remained below zero in the previous month.
For the euro, the timing of the improvement is particularly relevant. EUR/USD’s recent recovery has been driven largely by a repricing of US interest-rate expectations following disappointing American economic data. An improvement in Eurozone sentiment gives the single currency a domestic catalyst of its own and reduces the extent to which its recovery depends entirely on weakness in the Dollar.
The Sentix report is not normally as influential for EUR/USD as inflation figures or European Central Bank policy decisions, but the positive surprise adds to evidence that confidence in the Eurozone economy is stabilizing. If upcoming European indicators reinforce that picture, expectations for a widening economic-performance gap between the US and Eurozone could continue to ease.
Weak US Jobs Report Keeps EUR/USD Buyers in Control
The main catalyst behind the latest EUR/USD rally remains the sharp deterioration in the headline US employment figures. US Nonfarm Payrolls fell by 23,000 in July, delivering a much weaker result than markets had anticipated. Government employment accounted for a significant part of the decline, while private-sector employment remained positive, preventing the report from pointing to an outright collapse in hiring.
The unemployment rate also complicated the picture by unexpectedly falling to 4.1% from 4.2%. However, the decline was accompanied by weaker labor-force participation, limiting how positively markets could interpret the lower jobless rate.
For currency traders, the broader implication is that the Federal Reserve now faces greater uncertainty over how long restrictive monetary policy can be maintained if labor-market conditions continue to deteriorate. Expectations for further tightening have consequently softened, removing an important source of support for the US Dollar. That repricing has helped EUR/USD recover strongly from the 1.1350 region, with buyers pushing the pair back through 1.1500 and toward the 1.1600 psychological barrier.
US Inflation Data Could Decide the Dollar’s Next Move
The next phase of the EUR/USD price forecast will depend heavily on whether upcoming US economic data confirms the softer picture presented by the July jobs report.
Inflation will be particularly important. Weak employment combined with easing price pressures would strengthen the argument against additional Federal Reserve tightening and could place renewed downward pressure on the Dollar. Such a combination would also give EUR/USD buyers a stronger fundamental case for challenging 1.1600 and potentially extending the recovery.
The alternative scenario is more complicated. If US inflation remains stubbornly elevated, the Fed could have less room to respond to weaker employment conditions. That would leave markets balancing deteriorating growth indicators against persistent inflation, potentially restoring some support for US Treasury yields and the Dollar. EUR/USD therefore enters the new week with momentum on its side, but the durability of the rally will increasingly depend on whether upcoming US releases validate the market’s more cautious Fed expectations.
EUR/USD Outlook
The EUR/USD outlook remains cautiously bullish above 1.1500, supported by weaker US employment data, reduced expectations for additional Fed tightening and the unexpectedly strong Eurozone Sentix Investor Confidence reading.
A sustained move above 1.1600 would strengthen the bullish case and could open the door toward 1.1650. However, failure to clear 1.1580-1.1600, combined with a break below 1.1500, would suggest the post-NFP recovery is losing strength and could bring 1.1465 back into focus. For now, buyers retain the advantage, but 1.1600 remains the level EUR/USD must break to turn the current recovery into a more convincing bullish extension.
EUR/USD is holding near 1.1550 as the US Dollar remains under pressure following weak US Nonfarm Payrolls data. The euro also received support after the Eurozone Sentix Investor Confidence Index rose to +0.9 in August from -3.1, beating expectations.
The EUR/USD outlook remains cautiously bullish while the pair holds above 1.1500. A break above 1.1600 could strengthen momentum toward 1.1650, while a drop below 1.1500 could expose 1.1465.
The short-term EUR/USD trend remains bullish, although momentum is beginning to moderate near 1.1580-1.1600 resistance. Holding above 1.1500 would preserve the current bullish structure.
