Euro Slides Under 1.1600 as Eurozone Inflation Hits 3.3% — Consensus Path Points to 1.1493 This Month

EUR/USD traded 1.1580 on Wednesday, September 2, after slipping to 1.1575 during the early European session — the lowest level in two weeks. The pair fell for a second consecutive day, closing Tuesday in negative territory at 1.1601 after touching an intraday low of 1.1587 and shedding 0.14% on the session. Tuesday's rally attempt was rejected at the 1.1620 area, the second failure at that shelf inside a week.

The three-session sequence reads as controlled distribution rather than panic. Monday opened with an attempt to stabilize around 1.1587. Tuesday pushed to 1.1620 and failed. Wednesday broke 1.1600 outright and printed 1.1575. That is 45 pips of range compression with every bounce sold, and the pair has now given back the entire recovery it staged after Jackson Hole.

Context from the year's arithmetic: EUR/USD opened 2026 at 1.1721. At 1.1580, the euro is down 1.20% against the dollar year to date. The pair has traded a 1.14 to 1.20 band across the calendar year, which places current spot 3.4% off the top of that range and 1.6% above the bottom.

The dollar side is doing all the work. The Dollar Index traded 0.1% higher near 99.75 on Wednesday, its highest level in over two weeks. GBP/USD declined toward 1.3500. AUD/USD fell 0.1% to around 0.7135. This is broad-based dollar strength driven by two forces stacking in the same direction rather than a euro-specific problem.

The thesis for this forecast is the part most participants are getting wrong: this is not a rate-differential trade right now. Both central banks are about to hike 25 basis points within six days of each other. The Federal Reserve meets September 15-16 with roughly 70% odds of a move, and the European Central Bank meets September 10 with a 25-basis-point increase to 2.50% almost fully discounted. If both deliver, the policy gap ends the month exactly where it started.

What is actually driving EUR/USD lower is the safe-haven bid into the dollar from an escalating Persian Gulf conflict, and a terms-of-trade shock that hits a net energy importer far harder than it hits a net energy exporter. That distinction determines where the pair trades into October.

The Dollar Index At 99.75 Is Catching A Double Bid

The greenback is being bought for two independent reasons simultaneously, and separating them matters for the forecast.

The first is monetary. Rising bets that the Federal Reserve hikes on September 16 have lifted speculative demand for the dollar directly. The 2-year Treasury yield climbed to 4.33% and then 4.369%, its highest settlement in 19 months. The 10-year advanced for a sixth consecutive session to 4.814%, its highest since late 2023. The 30-year sat at 5.27%. Front-end yield expansion is the purest driver of currency carry, and the Dollar Index has found renewed support as those front-end yields push higher, with the inverse relationship between DXY and rates strengthening.

The second is geopolitical. Escalating U.S.-Iran hostilities are hurting risk appetite across every asset class, and the dollar remains the reflexive destination for that flow. Signs of rising Middle East tension boost safe-haven demand, supporting the greenback and creating a direct headwind for the major pair.

The unusual feature of this configuration is that both channels point the same way. In most risk-off episodes, safe-haven demand for the dollar coincides with falling yields as capital rotates into Treasuries — the currency gains but the carry deteriorates, and the net effect on EUR/USD is muted. Right now the safe-haven bid and the rate bid are reinforcing each other, because the geopolitical shock is inflationary rather than deflationary.

That is why the pair has broken 1.1600 without any deterioration in European data. The euro is not being sold. The dollar is being bought twice.

The comparison across the majors confirms the pattern is dollar-driven rather than euro-specific. Sterling at 1.3500, the Australian dollar at 0.7135, and the euro at 1.1580 all moved in the same direction on the same day, with the Dollar Index at a two-week-plus high near 99.75.

The vulnerability in this setup is that a double bid unwinds twice as fast when one leg fails. A ceasefire headline out of Hormuz, or a payrolls print that kills the September hike, removes one pillar and forces a repricing of the other. That asymmetry is worth holding onto.

Warsh Moved The Odds From 35% To 70% In Five Sessions

Federal Reserve Chairman Kevin Warsh delivered his first Jackson Hole keynote on Friday, August 28, and reset the dollar's trajectory in a single speech.

He told the audience the Fed's preferred inflation gauge sits at 3.7%, nearly double the 2% target, and that the summer's improved readings did not tell him underlying trends had meaningfully changed. His formulation was blunt: without clearer evidence that inflation is returning to target, the central bank would "have work to do."

The repricing has compounded every session since. CME FedWatch odds of a 25-basis-point September hike moved from approximately 35% before the speech to 57% by Monday, then 60.4%, then 66.1%, then above 66% by Tuesday, and to roughly 70% by Wednesday morning. Forward pricing now implies 17 basis points of Fed tightening for the September 16 FOMC, which corresponds to a market treating a move as the base case rather than a risk.

The supporting cast reinforced it. Boston Fed President Susan Collins articulated a lower bar for hikes than she previously had, a shift from the June meeting when she penciled in no change through year-end. Kansas City Fed President Jeff Schmid and Cleveland Fed President Beth Hammack both hardened hawkish positions.

The scale of the reversal is what makes it a currency event rather than a rates event. Two weeks before Jackson Hole, the consensus held that the Fed would keep the target range at 3.50%-3.75% through the remainder of 2026, with any cuts deferred to 2027, and a fully priced 25-basis-point hike pushed out to January 2027. EUR/USD was holding near 1.1670 on that assumption, with a 1.17 September projection and 1.18 year-end path widely accepted.

Ten trading days later the pair sits at 1.1580 and the September FOMC carries a 70% probability of the first hike of this cycle.

The complication traders are now working through is whether energy prices force the Fed's hand independently of the labor data. Higher input costs complicate the inflation outlook, and it becomes harder for the committee to leave rates on hold if crude keeps climbing into the meeting. That dynamic ties the dollar directly to Brent, which is the opposite of the relationship most currency models assume.

A 38,000 ADP Print Failed To Dent The Dollar

Wednesday delivered a genuine test of whether soft U.S. labor data can still push EUR/USD higher, and the euro barely registered it.

ADP's National Employment Report showed private-sector employment up 38,000 in August against a 47,000 consensus — the slowest month since January. July was revised up to 46,000 from 44,000. The internals were considerably weaker than the headline. Goods-producing industries lost 10,000 jobs outright, manufacturing shed 17,000, and natural resources and mining dropped 5,000, partly offset by 12,000 in construction. Service-providing industries added 48,000, but education and health services alone contributed 45,000 of that, with leisure and hospitality at 16,000. Professional and business services shed 16,000. Trade, transportation and utilities lost 5,000.

Strip health care and hospitality out and U.S. private payrolls contracted last month.

EUR/USD traded 1.1575 before the release and 1.1580 after it. Five pips.

That non-reaction has precedent from the prior session. On Tuesday, the ISM Manufacturing Purchasing Managers Index fell to 54.6 in August from 55.6 in July, missing the 55.2 forecast, and the dollar showed little weakness following the release. Two consecutive U.S. data misses have produced no meaningful euro recovery.

Wage data explains the indifference. Median base pay rose 3.2% and gross pay 4.7% year over year for all workers. Job-stayers registered 3.0% base and 4.4% gross; job-changers 4.7% and 7.3%. Compensation growing above 4% while the Fed's preferred gauge sits at 3.7% describes a labor market soft on quantity and hot on price — the exact combination that keeps a hawkish committee hawkish and the dollar bid.

Friday's nonfarm payrolls report carries a consensus near +53,000 after July's -23,000, with unemployment projected at 4.1% and 1.05 job openings per unemployed person in July.

Strong payrolls, steady wage growth and a stable average work week would validate the hawkish stance and press EUR/USD below 1.1500. Weak data would cast doubt on the September move, pull yields lower, and hand the euro a recovery. Friday is the entire trade.

Eurozone Inflation Hit 3.3% And Energy Did All Of It

The European side of this pair got its own inflation shock on Tuesday, and the composition matters more than the headline.

Eurozone annual inflation accelerated to 3.3% in August from 2.9% in July, matching expectations, according to the Eurostat flash estimate. That is the highest reading since September 2023 and the highest of 2026, marking a second consecutive monthly increase after 3.2% in May, 2.8% in June and 2.9% in July. It is also the sixth straight month above the 2% target.

Energy accounted for essentially the entire move. Energy inflation jumped to 14.3% from 10.3%, its highest since January 2023, driven by disruptions in the Strait of Hormuz and the ongoing Iran conflict. Non-energy industrial goods inflation ticked up to 1.2% from 0.9%. Food, alcohol and tobacco held at 1.2%.

Underlying pressure moved the other direction. Core inflation — excluding energy, food, alcohol and tobacco — fell to 2.4%. Services inflation eased to 3.0% from 3.3%.

That split is the defining feature of the European macro picture. Headline is running at a three-year high while core is 90 basis points lower and services, the wage-sensitive component, is decelerating. Europe does not have a domestic inflation problem. It has an imported energy problem.

The distinction has direct currency consequences. Imported energy inflation is a terms-of-trade shock, not a demand shock. It transfers real income out of the euro area to energy exporters. A currency facing a terms-of-trade deterioration weakens, regardless of what the headline inflation print says, because the region has to buy more dollars to pay for the same barrels.

The ECB's June staff projections put headline inflation at an average of 3.0% for 2026, 2.3% for 2027 and 2.0% for 2028, with the ex-energy-and-food measure at 2.5% for 2026 and 2027 and 2.2% for 2028. August's 3.3% headline sits above that baseline; the 2.4% core sits below it.

That is the trap the Governing Council walks into on September 10.

The ECB On September 10 Is 98.9% Priced For 2.50%

The European Central Bank meets on Thursday, September 10, five days before the FOMC, and the market has already decided what it will do.

Traders assign a 98.9% probability to a 25-basis-point increase, which would take the deposit facility rate from 2.25% to 2.50%. Markets are fully pricing the move.

The path here is short and recent. The Governing Council raised all three key rates by 25 basis points on June 11, lifting the deposit facility from 2.00% to 2.25% — the first hike in three years — with the main refinancing operations rate at 2.40% and the marginal lending facility at 2.65%. The decision cited the war in the Middle East as generating inflation pressures, and the Council described the move as robust across a range of scenarios mapping how the shock might evolve.

The July meeting held rates unchanged. The minutes, published in late August, made clear the pause should not be read as the end of the tightening cycle, with another hike likely unless the inflation outlook improved significantly. Policymakers deliberately kept the September decision open to allow room for the medium-term outlook to improve. It did not improve. Energy went from 10.3% to 14.3%.

Those same July minutes anticipated exactly this: policymakers noted that the pass-through of higher energy costs to consumer liquid fuel prices might not have been fully reflected in July and could take until August to materialize.

The August print therefore does not surprise the Council. It confirms what it already expected, which is why the market has moved to near-certainty.

The debate that remains is about what comes after. A headline jump makes a September hike easier to justify, while the subdued 2.4% core fuels argument over whether a subsequent move into genuinely restrictive territory is warranted. Raising rates to fight an external energy shock creates a real trade-off — monetary policy cannot reopen shipping lanes or add barrels to the market, but it can suppress domestic demand, and for European small and medium enterprises another increase in financing costs risks postponed or abandoned investment.

Both Banks Hike And The Differential Ends Up Unchanged

Here is the arithmetic that most EUR/USD commentary is skipping this week.

The federal funds target range currently sits at 3.50%-3.75%, a midpoint of 3.625%. The ECB deposit facility rate sits at 2.25%. The policy differential is 137.5 basis points in the dollar's favor.

If the ECB hikes to 2.50% on September 10 and the Fed hikes to 3.75%-4.00% on September 16, the new differential is 3.875% minus 2.50% — 137.5 basis points. Identical.

Two central banks, two hikes, six days apart, and the carry advantage that theoretically drives this pair does not move a single basis point.

That is why the differential framework cannot explain the current decline, and why traders relying on it are positioned incorrectly. EUR/USD has fallen 45 pips in three sessions while the expected September-end policy gap has stayed flat. Something other than carry is moving this pair.

The rate differential has narrowed considerably across 2026, from over 225 basis points at the start of the year to roughly 162 basis points by spring and 137.5 basis points now. Under a pure differential model, that compression should have delivered euro strength. Instead the pair opened the year at 1.1721 and trades 1.1580 — down 1.20% into a 90-basis-point narrowing of the gap.

The explanation is that currency markets in September 2026 are pricing terms of trade and safe-haven flow rather than carry. Europe imports the energy shock. The United States, now a net energy exporter with domestic crude production benefiting from $91.78 WTI, absorbs it far better. Every dollar Brent rises transfers real income from the euro area to producers.

The practical implication for the forecast: watch the differential only as a stabilizer, not a driver. It caps how far the euro can fall on rate grounds, because the gap is not widening. What it cannot do is generate euro strength while the energy channel is running against Europe and the dollar carries a war premium.

A 145-Basis-Point Bund Spread Inside A Global Bond Rout

The sovereign yield picture underneath this pair has moved further in a week than it did in the previous quarter, and the moves are not confined to one side.

The German 10-year Bund yield reached 3.364%, a level unseen since 2011. The U.S. 10-year hit 4.814%. That leaves the transatlantic 10-year spread at approximately 145 basis points — wide by post-2022 standards, but not the driver of the current move, because the Bund has been rising alongside the Treasury rather than lagging it.

The rout is global. The 10-year Japanese government bond crossed 3% to hit a 30-year high after the Bank of Japan governor confirmed the central bank will keep raising rates. The 10-year U.K. gilt hit 5.255%, the highest since 2008, with the 30-year gilt at levels last seen in 1998. French yields also climbed.

Global bonds are absorbing a combination of rising inflation fears driven by higher energy prices, which in turn lift rate-hike expectations, while fiscal concerns and heavy supply weigh on the long end simultaneously.

For EUR/USD, the important consequence is that a Bund at 3.364% removes the euro's traditional funding-currency status. When European yields were pinned near zero, the euro was systematically sold to fund carry trades elsewhere, which suppressed it structurally. At 3.364%, that mechanic weakens considerably — and yet the pair is still falling, which reinforces that the current move is flow-driven rather than yield-driven.

The Japanese leg matters as an indirect channel. For three decades, Japanese institutions exported savings into Bunds, OATs and Treasuries alike. At 3% on the JGB, that flow reverses toward domestic assets, removing a marginal buyer of European sovereign paper as well as American. Peripheral spreads inside the euro area become the variable to watch if that repatriation accelerates, and widening peripheral spreads have historically been a reliable euro-negative signal.

None of this is currently the dominant force. The dominant force is a dollar catching a war bid while the Fed is expected to tighten. But it is the channel through which a manageable currency decline turns into a disorderly one if the bond rout keeps extending.

Brent At $96 Is A Direct Tax On The Euro

The energy channel is where the euro's real damage originates, and Wednesday's crude tape made that explicit.

Brent crude for November delivery gained over 2% to $96.59 a barrel intraday, trading between $94.00 and $95.19 through the European session — roughly 7% higher on the week. West Texas Intermediate for October advanced 1.73% to $91.78, ranging $89.34 to $90.51. Brent rose about 5% on Tuesday to near $95, its highest since late July.

The escalation is severe and ongoing. U.S. forces launched a wave of strikes on Islamic Revolutionary Guard Corps targets across Iran, following weekend strikes on rocket launchers on Larak Island in the Strait of Hormuz. The IRGC claimed a heavy ballistic missile attack on Prince Hassan airbase and a U.S. Marine base in Jordan, with further attacks on U.S. bases in Bahrain and Iraq. Iran's Revolutionary Guards said two oil tankers struck naval mines attempting to transit the Strait, disabling both vessels. Treasury Secretary Scott Bessent said secondary sanctions would likely be announced weekly, that 17 million barrels transited Hormuz on Monday, and that Iran's bankruptcy is in an acceleration phase. President Trump said he was not trying to force Iran to the bargaining table.

Rising energy costs pose a significant challenge for eurozone economies, where they threaten to dampen already fragile growth. That is the sentence that matters more than any rate differential.

The mechanism is a terms-of-trade transfer. The euro area imports the overwhelming majority of its crude and a large share of its liquefied natural gas. Every dollar Brent rises increases the euro area's import bill and requires euro sellers to buy dollars to settle it. The United States, producing domestically and exporting LNG, captures the other side of that trade.

The asymmetry runs through corporate margins as well. European industrials face input costs that their American competitors do not, at a moment when the euro area manufacturing sector is barely expanding.

This is why the euro cannot rally on a hawkish ECB. The ECB is hiking because energy is expensive. Energy being expensive is precisely what is hurting the euro. The policy response and the underlying shock work against each other.

Core At 2.4% Means The ECB Is Hiking Into A Growth Shock

The composition of European inflation creates a policy problem with direct currency consequences, and it deserves separating from the headline number.

Core inflation fell to 2.4% in August. Services inflation eased to 3.0% from 3.3%. Headline rose to 3.3% from 2.9%. Energy jumped to 14.3% from 10.3%.

Domestic price pressure in the euro area is decelerating. Imported price pressure is accelerating. The ECB is about to hike 25 basis points in response to the component monetary policy cannot influence, while the component it can influence is already moving toward target.

That is not a hawkish signal for the currency. It is a growth signal, and a negative one.

The trade-off is real. Raising rates against an external energy shock cannot reopen shipping routes or increase oil supply, but it can stifle demand. Higher financing costs land hardest on European small and medium enterprises, where marginal investment decisions get postponed or abandoned outright. A central bank tightening into a terms-of-trade shock is compressing domestic activity to offset a price increase it does not control.

Currency markets price growth as readily as they price carry. A euro area facing 14.3% energy inflation, a manufacturing sector barely expanding, and a central bank about to add 25 basis points of restriction is not a growth story that attracts capital.

The counterargument has weight. If the ECB continues past September into genuinely restrictive territory — a second hike in October or December taking the deposit rate to 2.75% — while the Fed hikes once and stops, the differential compresses to 112.5 basis points and the euro gets a genuine tailwind. That scenario requires core inflation to stop falling, which it is currently doing.

The July minutes explicitly kept the door open to that path, noting the pause was not the end of the cycle. The debate now is whether a 3.3% headline with a 2.4% core justifies moving into restrictive territory, or whether the energy spike is a level shift that will drop out of the annual comparison by early 2027.

That debate resolves in October, not September. Until it does, the euro trades the growth story rather than the policy story.

Technicals: The 1.1564 Pivot Is The Line That Matters

The chart is balanced in a way that makes the next 50 pips genuinely decisive.

EUR/USD at 1.1580 sits above its 50-day simple moving average near 1.1500 by 0.69% and below its 200-day simple moving average near 1.1600 by 0.17%. That places spot inside the narrowest possible band between two major moving averages, with the 200-day acting as immediate resistance and the 50-day as the first structural support.

The 14-day Relative Strength Index reads 50.38 — the definition of neutral. Momentum-based technical scoring currently splits 13 indicators bullish against 13 bearish. There is no directional edge embedded in the oscillator picture, which means the pair will move on flow rather than on mean reversion.

As of late August the pair was trading near both its 8-day and 21-day exponential moving averages, above the 50-day EMA by 0.85% and above the 100-day EMA by 0.90%. Those cushions have since eroded as spot has fallen.

The pivot sits at 1.1564, 16 pips below current spot. That is the first level where the short-term structure genuinely breaks, and it is close enough that a single U.S. data surprise reaches it.

Below the pivot, the support sequence runs to the March 2026 swing low at 1.1476 (-0.90%) and then 1.1400 (-1.55%), which corresponds to the 23.6% Fibonacci retracement of the 2022-2026 advance. That 1.1400 handle is the structural floor of the entire year's range.

Above, resistance stacks at 1.1600 (+0.17%, the 200-day), 1.1620 (+0.35%, the level that rejected Tuesday's rally), 1.1700 (+1.04%), and the 2026 opening print at 1.1721 (+1.22%).

The immediate technical read is that the pair is consolidating below 1.1600 with further sideways action likely rather than an immediate breakdown. Neither side has control. What resolves it is Friday's payrolls, and the technical structure is simply the map for how far the move travels once the data lands.

U.S. Data Is Softening And The Dollar Does Not Care

The most instructive feature of this week is the gap between what U.S. data is saying and what the dollar is doing.

The ISM Manufacturing PMI fell to 54.6 in August from 55.6 in July, missing the 55.2 forecast. ADP private payrolls came in at 38,000 against 47,000 expected, the slowest month since January, with manufacturing shedding 17,000 jobs and professional and business services losing 16,000. MBA mortgage applications for the week ended August 28 registered -1%. Factory orders for July carried a +0.6% forecast against -0.3% prior, with durable goods holding at +1.1% in the final July reading.

Three consecutive soft prints. The Dollar Index rose to a two-week high near 99.75 through all of them.

That divergence tells you the currency is currently trading a single variable — the September FOMC — and treating everything else as noise until it either confirms or kills the hike. The market has decided the Fed's reaction function has shifted from employment to inflation, and until a data point speaks directly to inflation, the dollar holds its bid.

The equity tape corroborated the read on Wednesday. The Dow Jones Industrial Average gained 293.69 points to 53,060.57 while the Nasdaq Composite managed 26,110.72 for a 0.04% advance, and long-duration software names fell 8% to 16%. Gold recovered off a four-week low to trade above $4,320 on a modest dollar pullback, though upside remained capped by hawkish expectations. Bitcoin fell 1.80% to $77,118.98. Every asset priced off the discount rate got marked down.

An additional risk sits underneath the dollar's strength that few are discounting. Treasury Secretary Bessent has an extensive toolkit for supporting the bond market, and he has used it before — the August 19 announcement doubling long-dated buybacks from $2 billion to $4 billion per operation pulled the 30-year yield down 8 to 10 basis points and lifted gold more than 4%. If the Treasury intervenes again to cap yields, the dollar's rate bid weakens immediately, and EUR/USD reclaims 1.1620 fast.

That is the tail risk on the long-dollar trade going into Friday.

The Consensus Path Says 1.1493 Now And 1.1621 By December

The forward projections carry a specific shape that is worth laying out, because it disagrees with the direction of the last three sessions.

The 25-provider consensus places EUR/USD at 1.1493 by September 2026, 1.1621 by December 2026 and 1.1715 by March 2027. From spot at 1.1580, that path implies a further 0.75% decline this month, a 0.35% recovery by year-end and a 1.17% gain by the first quarter of 2027.

The near-term September target of 1.1493 sits below the 1.1564 pivot and just above the 1.1476 March swing low. That consensus was compiled before the Jackson Hole repricing fully worked through, which makes it a floor estimate rather than a ceiling.

Alternative modeling puts the December 2026 range between 1.1569 and 1.2041 with an average near 1.1805, and projects both the 50-day and 200-day moving averages converging at 1.16 by October 1. Individual forward calls before the hawkish turn had September at 1.17 and year-end at 1.18.

Longer-horizon bank projections compiled earlier in 2026 clustered between 1.15 and 1.25, with the base case targeting 1.22 to 1.25 by year-end on the assumption that the Fed would cut while the ECB held. That assumption is dead. Every one of those forecasts was constructed around a Fed easing cycle that has now inverted into a tightening cycle, which means the entire upper half of that distribution requires reconstruction.

Scenario weighting that survives the repricing looks different. A base case around 50% has the pair range-bound between 1.14 and 1.18 as both central banks move in small parallel increments — precisely what the 137.5-basis-point unchanged differential implies. A bull case requires the September Fed hike to be taken off the table by cooling U.S. inflation while the ECB delivers a second hike, restoring genuine divergence and pushing the pair toward 1.20 and above. A bear case sees the Fed hike, the ECB stop after September, and energy costs continue eroding European growth, taking spot through 1.1476 toward 1.1400.

The distribution has shifted meaningfully to the downside since August 28.

EUR/USD Price Forecast: Levels Into September 10 And 16

EUR/USD trades 1.1580 after printing 1.1575 and being rejected at 1.1620 on Tuesday, down 1.20% from the 1.1721 opening print of 2026 and sitting at a two-week low. The Dollar Index holds near 99.75, its highest in over two weeks.

The near-term bias is bearish, but for reasons the differential framework does not capture. Both central banks hike in September and the policy gap ends the month at an unchanged 137.5 basis points. What is actually pressuring the euro is a terms-of-trade shock — Brent up roughly 7% on the week to $96.59, energy inflation at 14.3%, and the euro area importing the entire cost — combined with a dollar catching both a war bid and a rate bid at the same time.

Downside targets in sequence: 1.1564 pivot (-0.14%), 1.1500 (50-day SMA, -0.69%), 1.1493 (September consensus, -0.75%), 1.1476 (March 2026 swing low, -0.90%) and 1.1400 (23.6% Fibonacci, -1.55%). A break of 1.1400 opens the bottom of the year's range with nothing structural until 1.1300.

Upside targets: 1.1600 (200-day SMA, +0.17%), 1.1620 (twice-rejected resistance, +0.35%), 1.1700 (+1.04%), 1.1721 (2026 open, +1.22%) and 1.1805 (+1.94%) as the December modeled average. Reclaiming 1.1620 on a daily close is the minimum requirement to argue the correction has ended.

The base case into the September 10 ECB and September 16 FOMC is a 1.1476 to 1.1620 range with a downward drift, and the resolution comes Friday rather than at either central bank meeting. A payrolls print materially below +53,000 pulls hike odds under 50%, drags the 10-year off 4.814%, removes the rate leg of the dollar's double bid, and puts 1.1700 in reach within a week. A print at or above consensus with wage growth intact confirms the hike, drives the Dollar Index through 100.00, and sends the pair to 1.1476 before the FOMC even convenes.

The verdict is bearish with a defined invalidation. Hold 1.1476 and this is consolidation inside a 1.14 to 1.20 annual range that resolves higher once the energy shock annualizes out in early 2027. Lose it, and 1.1400 comes quickly — with the tail risk on the other side being a Treasury intervention in the bond market that unwinds the dollar's entire rate premium in a session.

That's TradingNEWS