After opening July trading at the lower 1.09 mark, EUR/USD rose to the 1.12 range mid-July before dropping back to around 1.10. Economists at Mizuho Bank expect the pair to trade with a heavy topside in August.

ECB reverting back to hawkish mode will spur Euro buying

If the US releases stronger data going forward, the Dollar will be bought as investors price in further rate hikes within the year, with EUR/USD likely to move with a heavy topside. 

Speculative long positions also remain piled up when it comes to IMM currency futures contracts. Given this, Euro selling could accelerate if these positions are unwound, so caution will be needed. 

The Jackson Hole symposium will be held over August 24-26 and investors will also need to monitor this for clues to the direction of monetary policy for the rest of the year. If the ECB reverts back to hawkish mode on concerns about an inflation spiral, this will spur Euro buying.