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04.09.2026 05:37 AM
The EUR/USD currency pair managed to recover slightly on Thursday after a two-week decline, which itself was a correction against a month-long rise. Thus the underlying uptrend that began in late July effectively remains intact. In our view, the euro should continue to rise in the medium term, regardless of the Federal Reserve's plans and actions, and even despite geopolitical developments. However, if things were that simple in the FX market, every trader would be a millionaire.
For this review, we decided not to focus on Nonfarm Payrolls or the unemployment rate, which would be logical, but on the prospects for Fed monetary policy. At present, most market participants are confident the Fed will tighten policy in September. We believe the Fed will once again leave the key rate unchanged. Why? The Fed makes decisions based strictly on macroeconomic data. It did so previously. Now the US central bank is headed by a person closely aligned with Donald Trump, so one inevitably has to view monetary policy prospects through the prism of the US president's wishes. We believe all traders understand why Trump appointed Warsh as Fed Chair. To be precise, nothing is known for certain, but anyone who follows Trump's actions and statements can say with confidence: the American president makes decisions that primarily benefit himself.
The US president continues to demand rate cuts because they personally benefit him. Trump's campaign slogans promised a new era of economic prosperity and benefits for every American who votes Republican. Eighteen months later, it is clear: many Americans have suffered losses because Trump became president. Trump failed to conclude any significant wars, provoked a worldwide energy crisis, started a trade war, increased the US national debt by $3 trillion, and failed to address the budget deficit and the negative trade balance. In short, none of the campaign promises were fulfilled. The promised era of financial prosperity has not arrived.
On the contrary, Americans now pay more for foreign goods, gasoline, and any goods and services whose prices include transportation. Thus, low interest rates are useful to Trump so the economy can accelerate and he can claim from the podium something like "the President promised, the President delivered!" Therefore, Warsh was appointed to influence the Monetary Committee to cut the key rate. The White House does not care about inflation, and current US labor market indicators (which directly affect economic growth) do not allow the Fed to tighten policy.
If Warsh were not connected to Trump, we would admit the Fed might fight inflation. With Warsh, we do not believe that. Most market participants think the Fed Chair will not be able to convince the FOMC, and the FOMC cannot make decisions that are openly harmful to most Americans. We remind you that virtually all of Trump's decisions have not benefited the American people. That is why the ratings of the controversial president continue to hit negative records.
The average volatility of the EUR/USD pair over the last 5 trading days as of September 4 is 51 pips and is characterized as "medium." We expect the pair to move between 1.1568 and 1.1670 on Friday. The major linear regression channel has turned upward, indicating an uptrend. The CCI indicator entered the oversold area, signaling a potential end to the correction.
S1 – 1.1597
S2 – 1.1536
S3 – 1.1475
R1 – 1.1658
R2 – 1.1719
R3 – 1.1780
The EUR/USD pair continues an upward trend on the 4?hour TF, which may be the start of a new leg of a global uptrend on higher TFs. The global fundamental backdrop for the dollar remains negative, but in 2026, geopolitics first, and then the Fed's hawkish stance, provided strong support for the US currency. However, those factors no longer support the dollar now. If the price is below the moving average, shorts can be considered on corrective grounds, with targets at 1.1568 and 1.1536. Above the moving average, long positions remain relevant with targets at 1.1670 and 1.1719.
