6 August 2025,06:42
Daily Market Analysis
6 August 2025, 06:42
Key Takeaways:
*ECB signals steady policy as inflation cools, with cuts delayed to 2026
*Lingering U.S.–EU trade tensions and GBP resilience cap EUR upside
*Euro remains range-bound amid macro headwinds and cross-currency dynamics
The euro remains stuck in a tight range as investors weigh the European Central Bank’s steady policy stance against a backdrop of sluggish eurozone growth and external trade risks. ECB policymakers, including Robert Holzmann and President Christine Lagarde, have reinforced a cautious tone, emphasizing that current policy remains “expansionary” and downplaying prospects of near-term easing. Money markets now price in the first rate cut no earlier than 2026, reflecting the ECB’s preference to hold the line until growth and inflation trajectories become clearer.
Meanwhile, broader dollar weakness—driven by rising U.S. rate-cut expectations—has failed to deliver sustained upside for EUR/USD. The pair briefly tested 1.1600 but remained vulnerable to downside as eurozone composite PMI hovers at just 50.9 and trade disputes with Washington show no signs of resolution. The EU has delayed retaliatory tariffs for now, but the standoff over steel and aluminum duties still at 50% continues to cloud the outlook.
Adding to the euro’s crosswinds is the British pound, which has shown relative strength on the back of a cautiously hawkish Bank of England and robust services sector performance in China. EUR/GBP has struggled to gain traction, with markets now looking toward the BoE’s upcoming rate decision. While a 25bps cut is widely expected, any signal of a pause in further easing could reinforce GBP outperformance and weigh further on the euro’s performance across key crosses.
With no major catalysts on the immediate horizon, the euro is likely to remain trapped between 1.1550 and 1.1650 in the near term. Any break higher will require softer U.S. macro data or concrete progress on EU-U.S. trade negotiations, while persistent sterling strength may keep EUR/GBP capped near the 0.8400 level.
Technical Analysis
EURGBP, H4:
On the chart, EUR/GBP appears to be forming a classic cup and handle pattern, typically viewed as a bullish continuation signal. The “cup” portion is characterized by a rounded bottom that developed between late July and early August, reflecting a gradual shift from bearish to bullish sentiment. This was followed by a brief consolidation phase in which the “handle” formed a shallow dip just beneath the neckline resistance at 0.8715.
Currently, the pair is testing the confluence of resistance near 0.8715, which also aligns with the broken ascending trendline from mid-July. A decisive breakout above this zone could validate the bullish pattern, opening the door for a potential move toward the 0.8790 resistance area. However, rejection at this neckline may trigger a minor pullback, especially if momentum fades.
The RSI is hovering around 54, with a slight upward bias but lacking strong momentum, while MACD remains marginally bullish, with its histogram flattening. Together, these indicators suggest that a breakout is possible yet not confirmed and traders should watch for either a candle close above 0.8715 or a rejection that keeps price trapped below resistance.
Resistance Levels: 0.8715, 0.8790
Support Levels: 0.8650, 0.8620
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