The US Dollar falls which takes the EUR to August highs – EURUSD and DXY outlooks

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The US dollar finally breaks its range ahead of Wednesday's FOMC as market participants keep placing their pre-Meeting bets.

After holding between 97.50 to 98.50 since August 11th, the Dollar Index has failed to hold support to start this week to regain lows reached in the previous week's downward fakeout.

With Equities rallying to their continued highs, hopes for a dovish cut are extremely optimistic which could lead to some furious reactions.

This move notably weakening the US Dollar also assisted majors like the British Pound and the Aussie to reach new highs.

As a matter of fact, despite the odds for 50 bps retracting from 10% to 4% since Thursday, the US dollar still broke support which could be due to position closing or hedging (more on this in the EURUSD analysis) – Some mean-reversion buying is happening as I write this piece which deserves a close look.

The Euro is also getting close to its August 22 peak which got reached right after Jerome Powell's Jackson Hole speech – As the FOMC approaches, let's have a look at levels for the EURUSD and the Dollar Index.

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EURUSD 4H Chart – close to new monthly highs but forms a convergence

EURUSD 4H Chart, September 15, 2025 – Source: TradingView

Buyers took the most traded currency pair to about 120 pips from its Monthly highs and will have to do more work to reach new highs.

A short-term bearish convergence (where a lower high in price = lower high in RSI) could prevent further movement – Don't forget that even if Market had to retrace from here, rangebound consolidation could impede much movement before.

Nonetheless, the action is still evolving in an upward channel which should be monitored for breakout/continuation scenarios.

A dovish cut from the FED could easily propulse the pair to new yearly highs (currently 1.1830) and vice-versa, but looking at the charts and recent price action, downside reactions could be heavier on a hawkish FED (which would also trigger many other Markets to revert).

Keep a close eye on pre-FOMC trading in the pair, the highest it goes, the more dovish the expectations for Wednesday.

Levels of interest for EURUSD trading:

Resistance Levels:

• 1.1780 September 9th highs
• Main resistance 1.18 to 1.1830 (yearly highs)
• 1.20 psychological level and 2021 highs

Support Levels:

• 1.1750 Intermediate Pivot (+/- 150 pips)
• 1.1650 Key support
• 1.16 Main support
• 1.1470 Pivotal Support (bearish below this)

Dollar Index (DXY) breaks its range support, what next?

It is surprising to see that the range that held so strongly amid many dovish data points (dovish NFPs, last week's CPI and PPI) just before breaking at the weekly open.

These days, everything can happen in Markets but in the past, action tended to stay more rangebound throughout the first few days of the week before the Wednesday meetings. However, everything is possible!

A test of the past week fakeout-lows is approaching and breaching it could lead to further technical downside.

However, the fundamentals of players putting more positions right before the FOMC are not adding up too much, so my guess would be that participants are currently hedging for a potential 50 bps cut, leading to the current moves.

Watch the 97.25 lows, buyers are currently mean-reverting right just above these lows.

Levels to watch for the Dollar Index:

Support Levels:

• 97.40 to 97.80 Range Support (currently getting broken, fakeout?)
• Last Pivot before run-higher 97.15 Zone acting as Key Support
• 2025 Lows Major support 96.50 to 97.00

Resistance Levels:

• 98.00 Mid-Range pivot
• 98.50 to 98.80 Resistance Zone
• Mid-line of the ascending channel and psychological level 99.50
• 100.00 Main resistance zone

Safe trades and a successful FOMC week!

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