R-Star changes the game: why EURUSD is ready for a breakout
After John C. Williams’ speech, the USD may lose ground, pushing the EURUSD rate higher towards 1.1730. Discover more in our analysis for 26 August 2025.
EURUSD forecast: key trading points
- The Fed hopes to lower the interest rate back to pre-pandemic levels
- John C. Williams places emphasis on R-Star
- EURUSD forecast for 26 August 2025: 1.1730
Fundamental analysis
The forecast for 26 August 2025 generally favours the euro, as potential Fed rate cuts could significantly strengthen the EUR.
The fundamental outlook for 26 August 2025 takes into account the speech of FOMC member and New York Fed President John C. Williams, who stressed that the era of low interest rates (R-Star) is likely to continue. Even before the pandemic, R-Star values remained low, and according to him, the underlying drivers – demographics and weak productivity growth – have not changed.
For this reason, the Federal Reserve is interested in an interest rate that will have a neutral effect on the economy. Williams also pointed out that models developed by economists provide a more reliable estimate of the neutral rate than market-based indicators, which may be distorted by risks or excessive liquidity.
He emphasised that R-Star is a global phenomenon, reflecting the state of the world economy rather than just local factors. Experts estimate the optimal rate for the US, UK, Canada, and the eurozone at 0.5%.
The EURUSD forecast considers that the Fed may keep interest rates moderately low for longer than expected, even after the tightening cycle ends. Such actions increase uncertainty and could eventually weigh on the stability of the USD.
EURUSD technical analysis
On the H4 chart, the EURUSD pair formed a Hammer reversal pattern near the middle Bollinger Band. At this stage, the pair may develop an upward wave in line with this signal. Given the recent sharp decline, a correction towards the nearest resistance level at 1.1730 is possible. A breakout above this resistance would open the way for a continued upward move.
However, the EURUSD rate could dip to 1.1590 before resuming growth.
Summary
Today’s EURUSD forecast favours the euro, with EURUSD technical analysis suggesting growth towards the 1.1730 resistance level.
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.