EURUSD builds foundation for advance amid broad dollar weakness

The EURUSD pair is trading sideways as it lacks a clear directional catalyst, with its volatility declining in recent days. This gradual movement of the indicators points to a potential buildup for a hike.

On the daily chart, the Stochastic Oscillator (5, 3, 3) is in a neutral zone. The %K value is at 47, while the %D one remains at 44. This positions the indicator on the verge of crossing above 50, a level associated with bullish sentiment. The fact that the %K line is above the %D one means buyers are currently predominant over sellers, suggesting the potential for an upward impulse to develop.

The On-Balance Volume (OBV) mirrors market uncertainty while showing readiness for growth. The sustained increase from 1.4 million to 1.9 million in just two weeks, coupled with a recent surge, confirms the rising interest among buyers. On top of that, even during times of falling quotes, the OBV remained largely unimpacted, reflecting an optimistic investor sentiment in anticipation of a higher exchange rate.

Taken together, these indicators suggest that the market is recovering, and a new uptrend is forming.

Favorable fundamental factors support the likelihood of an ongoing bullish move. Traders anticipate the US central bank to cut interest rates in September, which would negatively impact the greenback. Moreover, attempts by President Trump to discharge Federal Reserve Board member Lisa Cook jeopardize investor faith in the regulator's impartiality and add more strain to the US dollar.

Here's a trading plan to consider:

Buy EURUSD at the current price (1.16103). Profits can be taken at 1.18085, the July resistance zone. Stop loss is set at 1.15480.

The forecast is relevant between August 27 and September 3, 2025.