The meeting between the Presidents of the United States and the Russian Federation, scheduled for today in Alaska, is a major geopolitical event with the potential to exert a significant influence on financial markets.
Expectations are mounting that the talks could lead to a cessation of hostilities in Ukraine – a prospect acting as a bullish factor for the euro. As a result, the EUR/USD chart has been displaying an upward trajectory this week (highlighted by the blue channel).
The blue arrow indicates that:
→ Yesterday’s release of the highest Producer Price Index (PPI) figures in three years triggered a sharp strengthening of the US dollar – possibly because market participants assumed the Federal Reserve might postpone monetary policy easing in light of rising producer prices (widely considered a consequence of Trump’s tariff measures).
→ However, the lower boundary of the upward channel prevented further decline, and today EUR/USD is showing optimism ahead of the presidential meeting.
EUR/USD Technical Analysis
On 7 August, we plotted a descending channel based on the sequence of lower highs and lows formed over the summer.
From the bearish perspective, the price is currently near a cluster of key resistance levels, which include:
→ the upper boundary of the descending (red) channel;
→ the 1.17145 level (a historical price interaction zone, as shown by the arrows on the left side of the chart);
→ the median line of the ascending (blue) channel.
Conversely, the bulls could be supported by:
→ the lower boundary of the blue channel;
→ the aggressive buying momentum evident in the sharp EUR/USD rally on 12 August (highlighted by the orange arrow).
The bullish case is further reinforced by the fact that buyers managed to fully recover from the decline that began on 28 July.
Given the above, we could assume some consolidation today as the market awaits the outcome of the presidential talks. The fact that the ADX indicator is hovering near its lows and trending downward underscores the current indecision and caution in the market.
However, Monday’s open could prove highly volatile. Be prepared for sharp EUR/USD movements in either direction, depending on statements made by the US and Russian leaders.
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