EURUSD flashes potential reversal of its downtrend

On Wednesday morning, September 10, the EURUSD pair attempted to resume its uptrend following a brief correction witnessed a day earlier. During this time, the price fell from a local high of 1.17792. Right now, the pair is trading at 1.17013.

The 4-hour (H4) chart shows a classic reversal pattern in the Stochastic Oscillator (5, 3, 3, Simple), which supports the case for the uptrend to resume. Upon entering oversold territory, the indicator turned to make much headway. The %K line has crossed above the %D one, suggesting that market momentum is shifting toward buyers. 

Support for this trend also comes from the Chaikin Oscillator. Following a precipitous decline due to intense selling pressure, the indicator started to show signs of stabilization and an imminent upward trajectory. This suggests revived interest from purchasers. Despite the figure still being in negative territory, its shift implies that selling pressure is diminishing, and an accumulation phase may begin prior to a new rally.

From a fundamental standpoint, a potential split in borrowing costs between the Federal Reserve (Fed) and the European Central Bank (ECB) is considered to be the driving force behind EURUSD. The primary market expectation for the American regulator is to ease monetary policy by 25 basis points at its September meeting, though a 50-point rate cut remains a minor possibility. Meanwhile, the ECB is likely to maintain its current borrowing cost setting.

Notably, investors are focusing on this interest rate divergence rather than on the political risks emanating from France, where President Macron's search for a fifth Prime Minister in two years could otherwise pressure the euro.

Consider the following trading strategy:

Buy EURUSD at current levels or when the price rebounds from 1.16900. Take profit: 1.18000. Stop loss: 1.16500.

This forecast is valid from September 10 to September 17, 2025.