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The Euro (EUR) holds onto its recovery move to near 1.1220 against the US Dollar (USD) in the European trade on Thursday. The major currency pair rebounded at the expense of the US Dollar.

In the European trade, the US Dollar Index (DXY), which tracks gauges the Greenback’s value against six major currencies, is down 0.5% to near 102.00.

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHFUSD-0.52%-0.50%-0.32%-0.24%0.61%-0.31%-0.61%EUR0.52%0.02%0.19%0.25%1.16%0.19%-0.09%GBP0.50%-0.02%0.19%0.23%1.11%0.17%-0.12%JPY0.32%-0.19%-0.19%0.04%0.93%-0.03%-0.31%CAD0.24%-0.25%-0.23%-0.04%0.86%-0.05%-0.35%AUD-0.61%-1.16%-1.11%-0.93%-0.86%-0.92%-1.22%NZD0.31%-0.19%-0.17%0.03%0.05%0.92%-0.31%CHF0.61%0.09%0.12%0.31%0.35%1.22%0.31% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The US Dollar faces selling pressure as hawkish Federal Reserve (Fed) expectations for the October meeting remains lower even after the United States (US) Consumer Price Index (CPI) report for September showing the price pressures grew at a faster-than-expected pace.

What’s next for Fed expectations for October?Analysts at OCBC highlight that “attention now turns to Kevin Warsh’s fireside chat with IMF Managing Director Kristalina Georgieva on 16 October,” noting that the event is “confirmed on the IMF calendar, while the Fed lists the discussion ahead of its 27-28 October FOMC meeting.” With markets “now assigning meaningful odds to an October hike,” OCBC expects investors to closely monitor the session, as “investors will scrutinise Warsh for any hint that the Fed is leaning toward moving sooner rather than waiting until December.”

Later in the day, investors will focus on the US Producer Price Index (PPI) data for September, which will be published at 12:30 GMT. The headline producer inflation data is seen at 5.3% Year-on-Year (YoY), lower than 5.4% in August. The core PPI – which excludes volatile food and energy items – is also expected to come in lower at 4.4% from the previous reading of 4.6%.

On the Euro front, the Industrial Production data for August has come in weaker-than-expected. The industrial sector activity declined at a faster pace of 0.5% in August. The data was expected to remain flat after contracting 0.3% in July, revised lower from -0.1%.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1215, maintaining a bearish near-term bias as spot remains capped beneath the 20-day Exponential Moving Average (EMA) at 1.1290. The failed attempt to reclaim this short-term trend proxy keeps the pair anchored in a corrective phase, while the Relative Strength Index (RSI) at 36 suggests momentum is recovering from oversold territory but not yet strong enough to challenge the prevailing downside structure.

On the topside, immediate resistance is located at the 20-day EMA at 1.1290, which acts as the first hurdle for any rebound and a key level that bulls would need to reclaim to ease selling pressure. As long as EUR/USD trades below this barrier, rallies are likely to be shallow, and the broader focus would stay on whether price can hold current levels rather than build toward a more sustained recovery.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator Fed's Chair Warsh speech Kevin Warsh took office as chairman of the Board of Governors of the Federal Reserve in May 2026, for a four-year term ending in 2030. His term as a member of the Board of Governors will expire in May 2040. Warsh, born in Albany (New York) on April 13, 1970, is an American financier and attorney who already served as a member of the Fed Board of Governors from 2006 to 2011 and was significantly involved in the central bank's response to the financial crisis.

Read more.

Next release: Fri Oct 16, 2026 03:30

Frequency: Irregular

Consensus: -

Previous: -

Source: Federal Reserve

EUR/USD Outlook: MUFG Links Sub-1.10 Risk to Higher US Yields
Hotter US inflation has reinforced MUFG's downside scenario for the Euro against the US Dollar, despite its doubts about the scale of Fed tightening.
MUFG's warning that the Euro could fall below $1.10 has gained relevance after stronger-than-expected US inflation revived the case for higher interest rates.

The bank outlined that possibility before Wednesday's CPI release, linking it to its projections for US two-year Treasury yields and a potential rise in the Dollar Index to 105.

At the time of writing, EUR/USD traded near $1.1153, down 0.43% from Tuesday's close, having recovered some ground from the afternoon sell-off.

Derek Halpenny, MUFG's head of research for global markets EMEA and international securities, wrote ahead of the data: "Based on our 2-year UST bond yield projections, the DXY could certainly advance to the 105-level that would imply EUR/USD potentially falling below the 1.1000-level."

This is a conditional downside scenario, with no deadline attached to the exchange-rate level.

Image: EUR/USD intraday chart post US inflation release.

The inflation surprise MUFG had warned about
The September CPI release showed prices excluding food and energy rose 0.3% on the month, against expectations of 0.2%, while annual headline inflation reached 3.7%.

Before the release, Halpenny wrote: "Near-term though the Fed look set to hike again and any upside surprise in today's data would likely trigger another rates sell-off and extend the dollar further stronger."

Selling Treasury bonds pushes their yields higher, and the two-year yield is particularly sensitive to the expected path of Fed interest rates.

Higher prospective returns on Dollar assets can then attract demand for the currency, providing the link between MUFG's yield projections and its EUR/USD warning.

The bank had set a demanding condition for a move in the opposite direction: "A consensus CPI print today is unlikely to alter rate expectations much and a meaningful miss to the downside (0.0% m/m core) would be required to see a notable dollar sell-off."

Wednesday's result went the other way, though it does not establish how far the subsequent repricing will run.

Halpenny had acknowledged a reason to tighten policy ahead of clearer evidence of wider inflation: "It's understandable that precautionary rate hikes will be seen as sensible given the risks of pass-through."

Why MUFG still questions a longer hiking cycle
Halpenny's pre-release policy view for December 2026 and beyond was explicit: "Still, we remain sceptical that inflation pressures will continue to build and while we expect the Fed to hike again in December, we do not expect the Fed to deliver the two further rate hikes currently priced by the markets."

"The inflation backdrop doesn't appear to be as bad as might have been expected when the conflict first started and if an assumption had been made that it would still be impacting energy supplies by the following October."

That position rested partly on the recent behaviour of core personal consumption expenditures inflation, a separate measure from CPI.

He wrote: "Taking the PCE measure of inflation, the annualised 3mth change fell in August to the Fed's 2.0% inflation target for the first time since July 2024."

The three-month annualised reading measures recent momentum, rather than the annual headline PCE change used in the Fed's longer-run inflation objective.

It also predates September's stronger CPI report.

Halpenny added: "There is little evidence of pass-through that likely reflects the fact that the non-AI economy in the US remains relatively weak."

That judgement now faces a more difficult test, with RBC's post-release warning about spreading price pressures, covered by Exchange Rates UK, highlighting the risk that higher transport and import costs are reaching a wider range of goods.

MUFG also questioned how restrictive policy would become if the anticipated hikes were delivered as inflation moderated.

Halpenny wrote: "If we project forward current market pricing for the Fed's policy rate by the middle of next year and use the consensus inflation forecast, the implied real fed funds rate reaches 2.60%, not far from the peak restrictiveness seen following the global inflation shock."

"We don't believe the Fed will need to raise rates to that level."

The calculation describes borrowing costs adjusted for expected inflation under market pricing, rather than MUFG's own forecast for the nominal policy rate.

A retreat in those expectations would weaken an important source of Dollar support, but prolonged energy disruption remains a risk to that outcome.

Halpenny warned: "Inflation risks ahead remains the dominant concern of central bankers given the extended period of elevated energy prices risks feeding more broadly into non-energy inflation."

EUR/USD exchange rate FAQs
Is EUR/USD below 1.10 MUFG's dated forecast?

No. It is a conditional downside scenario linked to the bank's US Treasury-yield projections and a possible Dollar Index rise to 105.

Why does stronger US inflation matter for the Euro?

It can increase expectations for Fed tightening, supporting US yields and demand for Dollar assets at the Euro's expense.

Does MUFG expect a prolonged Fed hiking cycle?

Before the CPI release, MUFG expected a December 2026 increase but doubted that the Fed would deliver the two further rises then priced by markets.

The EUR/USD forecast hinges on U.S. CPI after five straight weekly losses, with hawkish Fed bets and a fully priced ECB rate hike weighing on the euro.

Fawad Razaqzada, StoneX Media Market Analyst, explains how the five-week downtrend, U.S. inflation data and crude oil prices shape the euro and U.S. dollar outlook.

With CPI expectations well defined, a meaningful surprise is needed to trigger a strong dollar move. Crude oil prices and bond yields remain key dollar drivers as Middle East military activity remains high, while French government finances weigh on the single currency.

This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of FOREX.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com.

EUR/USD rises from 17-month low but French fiscal and political concerns linger
The euro/U.S. dollar is recovering from a fresh 17-month low near 1.1150 and hovers just above 1.12 at the time of writing, although the broader bearish structure remains.

French fiscal and political concerns could continue to weigh on the euro. President Emmanuel Macron's government is anxious to pass a budget before the end of the year as it seeks to reassure markets that France can bring down its debt mountain. However, in political jostling ahead of next year's presidential election, opposition parties oppose the government's proposals.

The 10-year yield has risen as high as 4.5% in recent days, but the finance minister insists that France has not yet caught an adverse snowball effect. However, surging costs could spiral into a full-blown debt crisis if action isn't taken soon.

Budget talks have started, and the Socialist motion against the budget was denied after failing to pass an initial hurdle. However, France may need to experience more market pressure before significant progress is made.

The ECB is expected to hike rates once more before the end of the year. The Belgian central bank governor has joined the chorus of policymakers saying that the ECB will probably have to hike rates again. His comments come as inflation data is due later this week and is set to approach 4%, well above the ECB's 2% target.

Growth has been surprisingly resilient, given the energy price spike triggered by the conflict in the Middle East. However, ECB President Christine Lagarde has warned that an escalation in the war remains a key risk, and surging bond yields will weigh on activity more than previously expected. Lagarde also noted that elevated euro area inflation, driven by higher prices, is yet to feed into the broader economy.

Should French debt suffer heavier losses, the ECB may be forced to abandon rate hikes, which could see the euro come under more pressure.

The U.S. dollar is trading cautiously just below 18-month highs ahead of U.S. CPI data. Stronger-than-expected data could raise Fed rate hike expectations and lift the U.S. dollar, creating a headwind for EUR/USD.

EUR/USD forecast – technical analysis

The euro/U.S. dollar has extended its move southwards, falling to a fresh 18-month low of 1.1155 before recovering to 1.12 at the time of writing. This has helped bring the RSI out of oversold territory.

Sellers will look to break below 1.1155 to extend the move southwards towards 1.11 and 1.10, the psychological level.

Any recovery first needs to rise above 1.12. Above here, attention turns to 1.13, the 20 EMA, before the 1.1350 resistance zone and the 50 EMA at 1.1410 come into focus.

USD/JPY looks to US CPI data
USD/JPY is struggling to extend yesterday's bounce, with few signs of meaningful traction on Wednesday amid mixed fundamental cues.

The U.S. dollar is broadly flat as investors look cautiously ahead to the release of U.S. inflation data.

U.S. CPI is expected to show that inflation rose by 0.6% month on month in September, up from 0.4% in August. However, core inflation, which excludes more volatile items such as food and fuel, is expected to ease to 0.2%, down from 0.3%. Inflation data will be followed by PPI figures on Thursday and Federal Reserve Chair Kevin Warsh's speech on Friday, where he may provide more clues on the policy outlook.

The market is currently pricing in a 20% probability of a rate hike in October, but still an 85% probability of a hike before the end of the year. New York Fed President John Williams said the Fed would likely need to hike rates before the end of the year. However, he added that he did not see any rate hikes in 2027.

Hotter-than-expected inflation could see the market reprice Fed rate hike expectations higher, boosting U.S. yields and the dollar.

Meanwhile, reports that Bank of Japan officials are leaning against a rare back-to-back interest rate hike are undermining the Japanese yen and acting as a tailwind for the pair.

Bank of Japan Governor Ueda said policymakers would continue to closely monitor bond yields, reiterating that long-term interest rates should be determined by market forces.

The yen is also under pressure amid rising oil prices as hostilities in the Middle East escalate, raising concerns over supply disruption.

USD/JPY forecast – technical analysis

USD/JPY has extended its recovery from the 152.90 low to a peak of 158.75. The price trades above its rising trend line and the 250 EMA, while the RSI is also above 50, keeping buyers hopeful of further upside.

Buyers will look to rise above 159, the September 24 swing high, before attention turns to the 160 resistance zone.

On the downside, immediate support is seen at the 50 EMA at 158.10 and the 200 EMA at 157.70. Below here, attention turns to 157.25 horizontal support, below which sellers could gain traction towards 155.

Key Points:Markets price a 77% probability of the Fed holding rates steady in October, while September CPI is expected to reach 3.6%, keeping December tightening expectations in focus.DXY remains under pressure below its rising trendline, with a break beneath 101.93 potentially exposing 101.62 and 101.32, while 102.61 remains key resistance.EUR/USD tests descending trendline resistance at 1.1233, with a breakout potentially targeting 1.1275 and 1.1315, while 1.1157 remains critical support.GBP/USD breaks above its descending trendline and targets 1.3284, with a sustained breakout opening 1.3323 and 1.3368, while 1.3222 remains key support.Dollar Index: CPI Becomes the Test for Fed Patience In the lead up to U.S. inflation data for September, the fundamental outlook for the U.S. dollar softened as the market reassessed the need for further Fed tightening. According to the August reading, headline CPI rose 0.4% from the previous month and 3.4% on a year over year basis. For September, the median estimate of economists is for an annual increase of 3.6% from a year ago, with the month over month increase estimated at 0.6%. Market participants now place a 77% likelihood for the Fed to keep rates unchanged at the October meeting, up from 51% last month. New York Fed President John Williams is still looking for one additional hike this year, keeping December in play.

EUR: Lagarde Tells France Fiscal Solution Must Come From Paris The euro is still stuck between a restrictive ECB and a deteriorating French fiscal situation. ECB President Christine Lagarde has previously warned against proposals for the central bank to cancel French debt, dampening hopes that the central bank would step in to bolster French bonds.

The ECB has already hiked rates twice in the last four months, with a third hike possible in December. The IMF has warned that elevated borrowing costs underline the need for fiscal consolidation. Meanwhile, ECB policymakers are closely monitoring wage developments for indications of second-round effects of inflation.

GBP: BoE Tightening Case Strengthens, but Budget Risk Lingers While the fiscal policy backdrop in the UK still presents risk from the upcoming October 28 budget, the recent hawkish shift from the BoE has opened up a strong differential case from other central banks. With energy costs still high and squeezing profit margins, BoE Governor Andrew Bailey said firms are prioritizing cost cutting which may feed through to lower staffing levels and lower wage growth. Markets are expecting a 25 basis point hike from the BoE next month despite the bank keeping rates on hold since the start of the Iran conflict.

U.S. Dollar Index Technical Analysis: DXY Slips Below Rising Trendline as 101.93 Support Comes Into Focus

Dollar Index Price Chart – Source: Tradingview The US Dollar is currently hovering around 102.11 according to the 2 hr chart, and pulled back from 102.61. What I find interesting is that price is currently trading below the rising trend line, and currently testing the short term moving average zone. The larger trend is still bullish as the DXY is still trading above the longer term moving average, however the shorter term trend is now moving sideways.

101.93 is the first level of support that I am looking at. A breakdown below this level would target 101.62 and then 101.32. If the dollar bulls are still in control, the first target of resistance would be at 102.61, with 102.97 and 103.36 being the levels to watch if this is broken.

RSI is currently in the lower half of its range and is showing a slowing in the bullish trend. I am neutrally biased with a slight bearish bias as long as DXY is trading below the rising trend line. I would look for a close above 102.61 to validate a bullish move, and a close below 101.93 to validate a move toward 101.62.

GBP/USD Technical Analysis: Sterling Breaks Trendline as 1.3284 Becomes the Next Upside Test

GBP/USD Price Chart – Source: Tradingview The GBP/USD pair is currently trading at 1.3273 after rallying and breaking above the descending trendline that had been limiting the pair’s upside movements. Another thing worth considering is price’s move back above the short-term moving average, and the fact that the pair remains well above the 1.3222 support area. Altogether, the above-mentioned developments have considerably improved the short-term structure.

EUR/USD Price Forecast

Every new EUR/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.

See all EUR/USD forecasts In the near-term, I see the 1.3284 level as the next resistance area, with a break above it targeting the 1.3323 and 1.3368 levels respectively. A move to the downside could see price test the 1.3222 support area again, with the 1.3180, 1.3147, and 1.3113 levels coming into play should the breakout fail to materialize.

RSI has also moved toward the overbought region, confirming the bullish bias, however, the strength of the move suggests a correction may be due. I am bullish while the pair trades above the 1.3222 support and the descending trendline. A clean break above 1.3284 strengthens the case for a move to 1.3323, and a break below 1.3222 negates the breakout.

EUR/USD Technical Analysis: Euro Tests Descending Trendline as 1.1233 Becomes the Breakout Trigger

EUR/USD Price Chart – Source: Tradingview EUR/USD is trading at 1.1206 on the 2-hour chart and rebounding from 1.1157. With price pressing directly into the descending trendline and the short-term moving average, I consider the current area important. It could be the location of a breakout after a long-term decline.

The first resistance I’m looking at is at 1.1233. A break above that would have 1.1275 and 1.1315 in sight. If the area between 1.1178 and 1.1157 holds, the 1.1233 resistance would likely remain the next upside hurdle. Other areas that would offer support if the recovery fails are 1.1128 and 1.1092.

RSI is in bullish territory. With that along with the price holding above 1.1157, I’ll lean slightly bullish. I’m neutral to slightly bearish below 1.1157. A clean move above 1.1233 would shift things more bullish, while a move below 1.1157 would allow sellers to take control again.

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

Latest news and analysis

The Euro (EUR) extends its Tuesday’s strong recovery move to near 1.1210 against the US Dollar (USD) during the Asian trade on Wednesday. The major currency pair attracts bids due to the correction in the US Dollar amid the pause in United States (US) Treasury Yields’ rally remaining intact ahead of the Consumer Price Index (CPI) data for September.

10-year US Treasury Yields have corrected to near 5.20% from its recent multi-decade high of 5.36%. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 102.10. The DXY has retreated from its yearly high of 102.61 posted on Monday.

According to estimates, both headline and the core CPI grew at a faster pace of 3.6% and 2.5% Year-on-Year (YoY), respectively. Analysts at Societe Generale see the Federal Reserve’s (Fed) policy outlook remaining largely unchanged even if core CPI rises to 2.5% YoY.

Currently, the CME FedWatch tool shows traders are confident that the Fed will leave interest rates unchanged in the policy meeting later this month and will deliver a hike in December.

Meanwhile, French fiscal risks due to ballooning public debt and firm expectations that the European Central Bank (ECB) will keep interest rates unchanged this month will likely cap the upside in the Euro.

According to a Reuters poll conducted October 5-8, 70 of 73 economists expect the ECB to hold its deposit rate at 2.50% on October 29.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1210, holding a bearish near-term bias as spot remains below the 20-period exponential moving average (EMA) at 1.1303.

The pair continues to be capped by this dynamic barrier, which reinforces the broader downside tone while the Relative Strength Index (RSI) at 32.15 hovers just above oversold territory, hinting that selling pressure is still dominant but not yet exhausted.

On the topside, initial resistance is located at the 20-period EMA around 1.1303, and a daily close above this level would be needed to ease the current bearish pressure and open the door to a deeper corrective bounce. On the downside, the October 12 low at 1.1153 is the immedaite support level; a decisive break below the same would expose the pair to 1.1100.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

Consumer Price Index ex Food & Energy (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.

Read more.

The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

Scotiabank strategists Shaun Osborne and Eric Theoret say the Euro (EUR) is marginally firmer versus the US Dollar (USD) on the softer USD tone, with ECB Governor Stournaras signalling continued gradual tightening. They judge EUR/USD retains a soft undertone and may be overshooting, as front-end spreads and risk reversals adjust, while their fair value model points to equilibrium around 1.1250, above current spot.

Euro edges up as ECB stays gradual"The EUR is marginally higher on the day, reflecting the generally softer tone of the USD. ECB Governor Stournaras remarked that the central bank will likely stick with its policy of gradual monetary policy tightening."

"Final German September CPI was confirmed at 3.3% in the year. The EUR retains a soft undertone but spot pricing may be overshooting somewhat."

"Front-end spreads have narrowed a little from the early October levels and short-term risk reversal pricing has pared the premium for EUR puts somewhat. Our fair value model suggests spot equilibrium sits around 1.1250 currently."

"EUR/USD short-term technicals: Neutral/bearish – Bearish pressure on the EUR may be moderating but there is little indication from short-term price action that a rebound is developing."

"Intraday price signals suggest a minor low may be developing around the mid-1.11 area. But short-term trend resistance remains intact at 1.1215 and a push above this area is the bare minimum the EUR needs to achieve to strengthen in the short run."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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After falling for the fifth consecutive week, the EUR/USD has kicked off this week on a downbeat note. As well as macro pressures, strong bearish momentum prevented the pair from staging a meaningful comeback earlier in the day, leading to weakness in the afternoon trade. The popular pair could be heading towards the 1.10 handle barring a surprise reversal in the dollar’s bullish trend, or improvement in euro area fundamentals. But further ahead, perhaps later in the year or in early 2027, the EUR/USD outlook could a lot more stable. For now, only with a sharp drop in oil prices, or if we see the return of the US dollar debasement trade amid concerns over US fiscal policy, could one expect the single currency to end its bearish bias. For now, US inflation remains sticky, Treasury yields are elevated and expectations of tighter Fed policy should keep the greenback supported against major currencies.  A potentially hot US September CPI report this week could reinforce these expectations.

French fiscal risks, oil pressure keep EUR/USD outlook undermined
The US dollar remained in demand in the first half of Monday’s session, weighing on the major FX pairs. News over the weekend, including continued Houthi strikes in Riyadh has had negative impact on foreign currencies so far, especially those where the economy relies on energy imports. The EUR/USD is particularly vulnerable as lingering concerns over French fiscal policy continue to undermine the euro. With French elections in April 2027, fiscal concerns could continue to weigh on the single currency in the weeks ahead. For now, I expect the EUR/USD to remain in a moderately bearish trend and potentially visit the 1.10 level in the coming days or weeks.

A sharper deterioration in French bonds could accelerate the euro selling pressure, especially if the contagion spreads to other European countries. That outcome could force the ECB to abandon further rate hikes and potentially even halt quantitative tightening. In that scenario, it will have to absorb higher inflation in order to avoid further chocking the economy.  

For now, high US yields, elevated energy prices and rising cross-market volatility create a tougher environment for the euro and emerging-market currencies. The dollar remains the safer bet until the macro backdrop starts to turn.

Technical analysis: EUR/USD on the brink
The EUR/USD remains under heavy pressure, having closed lower for the fifth consecutive week last week. From a technical analysis perspective, therefore, momentum is clearly bearish, with price consolidating near the recent range lows in recent days.

Source: TradingView.com
The 1.1215/20 level, marking the 127.2% Fibonacci extension level of the last upswing that began back in June, has now turned into resistance. So, this is an important level to watch on the EUR/USD chart in the week ahead. A break back above it could see the level turn back into support and potentially signal some stabilisation.

If that doesn’t happen and we continue to see weakness in the currency pair, the immediate downside target is the liquidity sitting below last week’s low, around 1.1160.

If that level breaks, 1.1000 would become the next major downside target, with 1.1100 likely to attract some attention on the way down.

Meanwhile, the 161.8% Fibonacci extension of the last upswing that began back in June comes in at around 1.1085, making this another important downside level to watch.

On the upside, 1.1215/20 is the first key resistance. Above that, there isn’t much in the way of obvious resistance until the 1.1325–1.1355 area.

The Euro to Dollar (EUR/USD) exchange rate slipped to 1.1182 on Monday as French fiscal worries and renewed Middle East tensions kept the US Dollar supported.

US inflation figures and Eurozone price data could decide whether the sell-off extends.

Latest — Exchange Rates:

Euro to Dollar (EUR/USD): 1.118203 (-0.17%)

Pound to Dollar (GBP/USD): 1.32329 (0.00%)

Dollar to Yen (USD/JPY): 158.62013 (+0.18%)

WEEKLY RECAP:

EUR/USD ended Friday at 1.1201 and fell again on Monday, moving towards October's 1.1163 low.

The pair dropped 2.5% in September and has already lost more than 1% during October.

French fiscal pressures remain a major drag.

The French-German 10-year yield spread has hovered near 140 basis points as investors question Paris's proposed €43 billion in budget savings.

ING's Chris Turner favours further declines, writing that "a further dip towards 1.1100/1120 looks more likely."

German industrial production rose 2% in August, but that resilience has failed to lift the Euro.

MUFG's Lee Hardman sees "no obvious positive catalyst" to reverse bearish positioning as leveraged funds rebuild short Euro positions.

The US Dollar, meanwhile, has benefited from renewed Middle East tensions and Brent crude trading above $100 a barrel, maintaining demand for the currency.

Federal Reserve tightening expectations have eased following softer US employment figures, but Wednesday's inflation report could change that calculation.

Scotiabank described the Euro as "soft but failing to hit fresh lows" amid elevated European bond-market stress.

Near-Term EUR/USD Forecast: US CPI and French Debt Risks in Focus For the Euro, Tuesday brings Germany's final September inflation figures.

Eurozone industrial production follows on Thursday, with Friday's final CPI expected to confirm headline inflation at 3.8% and core inflation at 2.5%.

For the Dollar, Wednesday's US CPI report is the main test, with annual inflation forecast at 3.6% and monthly core inflation at 0.2%.

US producer prices, retail sales and jobless claims follow on Thursday, while Fed Chair Kevin Warsh speaks on Friday.

A stronger-than-expected US inflation reading or renewed French bond selling could push EUR/USD towards 1.1100.

Softer US data and calmer European bond markets could instead encourage a rebound towards 1.1300.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

EUR/USD Recovery Outlook: UBS Questions European Risk Discount The Euro could recover against the US Dollar as investors reassess European risks and crowded currency positions, according to UBS strategists. UBS expects the Euro to recover to $1.20 by June 2027, arguing that a rush towards the US Dollar has pushed the exchange rate below what the relative performance of the two economies justifies.

EUR/USD ended Friday near $1.1201 after losing 2.5% in September, leaving the bank's mid-2027 projection roughly 7% above that closing level.

Latest-Exchange Rates:

Euro to Dollar (EUR/USD): 1.120134 (-0.10%)

Pound to Dollar (GBP/USD): 1.323299 (+0.03%)

Dollar to Yen (USD/JPY): 158.32755 (+0.17%)

The nearer objective is $1.16 by December 2026.

UBS strategists Constantin Bolz and Clémence Dumoncel write: "While we acknowledge the US growth advantage, we believe markets have become overly pessimistic on Europe. European data have remained more resilient than expected despite geopolitical tensions and higher energy prices. As a result, EURUSD now appears weaker than relative economic fundamentals would suggest."

The forecast requires investors to attach less weight to the risks facing Europe, allowing the exchange rate to recover even if the US economy continues to perform better.

The German government's latest autumn economic forecast raised expected 2026 growth to 1.3%, from 0.5%, helped by exports and defence and infrastructure activity.

Weak private consumption and investment remain qualifications, but the revision challenges the idea that Europe's energy exposure has overwhelmed its capacity to grow.

Image: Euro US Dollar Exchange Rate - EUR/USD - Quote - 5-Day Chart France and energy fears drive a larger discount UBS says: "The move has been driven by stronger US economic data, concerns over a potential US diesel export ban, rising global yields, and growing worries about France's fiscal outlook. Together, these factors have boosted the USD and weighed heavily on the euro."

A lasting deterioration in European growth would weaken the recovery case more fundamentally than a feared disruption that never materialises.

Bolz and Dumoncel write: "We are also sceptical that some of the recent USD-positive drivers will have a lasting impact. A diesel export ban remains a low-probability scenario, in our view, while European energy prices remain well below the levels seen during the 2021-22 energy shock."

France presents a more difficult judgement because the effect on the Euro depends partly on where investors move their money.

Selling French government bonds to buy German debt need not create the same currency pressure as withdrawing money from Euro-denominated assets altogether.

Recent Exchange Rates UK coverage of Rabobank's warning about French debt contagion examined precisely that risk of a wider retreat from the region.

UBS's Bolz and Dumoncel write: "In addition, EURUSD has historically shown limited sensitivity to French-German yield spreads and market attention may soon shift toward the US midterm elections, which could inject more volatility."

Crowded Dollar positions could magnify a reversal Investors who have already bought Dollars and sold Euros have helped drive the decline, but those positions also create potential buying demand if the evidence starts to move against them.

Bolz and Dumoncel write: "Most importantly, positioning and options data suggest the market has become crowded in favor of the USD. While this does not rule out further dollar gains in the near term, it makes the risk-reward of chasing EURUSD lower increasingly unattractive."

That argument builds on UBS's earlier expectation that European resilience would support a Euro recovery, but now gives positioning a prominent role in the potential rebound.

UBS spells out the conditions that could overturn its view: "Further beats for US economic activity, a renewed rise in global bond yields, a material deterioration in European growth prospects, or a significant escalation in fiscal concerns for France could push EURUSD lower. Conversely, softer US data, fading geopolitical concerns, and a stabilization in European sentiment could accelerate a recovery in the pair."

EUR/USD Exchange Rate FAQ What is UBS's EUR/USD forecast?

UBS expects $1.20 by June 2027, with a nearer objective of $1.16 by December 2026.

Why does UBS expect the Euro to recover?

It sees excessive pessimism about Europe and crowded Dollar positions that could unwind if sentiment improves.

What could prevent a rebound?

Stronger US data, rising bond yields, weaker European growth or worsening French fiscal concerns could keep EUR/USD under pressure.

Recent trading sessions continue to present a challenging environment for the euro in the short term. This can be seen in the performance of EUR/USD, which has declined by approximately 0.5%, reflecting another loss of ground for the European currency and highlighting the continued strength of the U.S. dollar.

For now, selling pressure remains supported by two key factors. On one side, the dollar continues to display resilience across recent trading sessions. On the other, growing concerns surrounding France's fiscal situation are beginning to attract more attention, creating a broader sense of caution across the eurozone. As long as these factors remain in place, selling pressure around EUR/USD could continue to play an important role in the sessions ahead.

Is a Debt Problem Emerging in France?
Over recent weeks, concerns surrounding France's fiscal position have become increasingly evident. The country's fiscal deficit currently stands near 5.4% of GDP, a level that reflects government spending continuing to outpace revenues and that remains well above the European Union's 3.0% fiscal deficit threshold.

At the same time, public debt has already surpassed €3.6 trillion, representing more than 100% of GDP and marking a significant increase compared with previous years. These figures have raised concerns because they point to a fiscal trajectory that is becoming increasingly challenging for one of the eurozone's largest economies.

This situation is also being reflected in the bond market. French government bonds have begun offering significantly higher yields relative to safer markets such as Germany. Currently, 10-year French government bonds yield around 4.8%, while equivalent German bonds remain near 3.4%.

The widening spread is particularly important because it shows that investors are demanding a growing risk premium to maintain exposure to French debt. In other words, markets are perceiving a higher level of risk than they did months ago and require greater compensation to justify holding French government bonds. Furthermore, this dynamic could become an additional challenge for public finances, as persistently higher borrowing costs increase debt-servicing expenses and make fiscal stabilization more difficult.

Source: TradingEconomics

This situation extends beyond France itself. It is also beginning to create concerns about the broader financial stability of the eurozone by increasing fears of potential financial fragmentation within the bloc.

As a result, some investors may begin reducing exposure to euro-denominated assets due to a higher perception of risk surrounding one of the region's largest economies. This could encourage a shift toward markets viewed as more stable and limit the euro's ability to attract consistent demand. If concerns surrounding France's fiscal outlook continue to intensify, confidence in the common currency could deteriorate further and continue supporting downside pressure on EUR/USD.

Is the Dollar Still a Threat?
It is also important to monitor the dynamics surrounding the U.S. dollar. Following the release of the latest Federal Reserve minutes, markets continue to expect that another rate hike could take place before the end of 2026.

This outlook continues to support the relative attractiveness of dollar-denominated assets and helps explain the resilience that the U.S. currency has maintained in the short term. The situation can be observed through the DXY, the index that measures the dollar's performance against its major counterparts, which continues to trade around the 102-point area, highlighting that demand for the dollar remains relatively stable.

Source: TradingEconomics

This dynamic remains important because it limits the euro's ability to recover. As long as the dollar continues benefiting from relatively supportive U.S. monetary policy expectations and maintains its current strength, EUR/USD may continue facing difficulties in regaining momentum during the coming sessions.

EUR/USD Technical Forecast

Source: StoneX, Tradingview

The major bearish trendline is regaining relevance: Since January 2026, a long-term bearish trendline has been developing on the EUR/USD daily chart. Although this technical structure lost some relevance during the more neutral market conditions seen in previous months, the recent weakness in the euro has begun to restore the importance of the bearish bias. As long as this dynamic remains in place, the downtrend could continue developing as the dominant technical structure in the weeks ahead.

 
MACD: The MACD histogram continues to trade below the 0 neutral line, a reading that suggests short-term moving-average momentum remains tilted to the downside. As long as this condition persists, selling pressure could continue dominating price action.

 
RSI: A similar picture can be observed in the RSI, which remains below the 50 neutral level, reinforcing the relevance of bearish momentum across the market. However, it is also important to note that the indicator is already trading below the 30 oversold threshold, a situation that could signal excessive selling pressure and create room for short-term corrective rebounds.

 
Key Levels:

1.13703 – Key Resistance: This level coincides with an important support zone that was broken in recent weeks and now acts as the most relevant upside barrier on the chart. Price action returning toward this area could begin to weaken the recent bearish momentum and support a more neutral trading environment.

 
1.12602 – Near-Term Barrier: A level that aligns with an important retracement zone observed over recent weeks and could become the primary reference to monitor in the event of short-term bullish corrections.

 
1.11275 – Major Support: A level not seen since May 2025 that remains the most important downside reference on the chart. Sustained moves toward this zone could reinforce the dominant bearish bias and open the door to a more aggressive extension of the current downtrend in the weeks ahead.

 
Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25

Euro remains firmly in red and holds just above new 2026 low (1.1160) on Thursday, pressured by strong dollar, higher oil prices and developing fiscal crisis in France.

In addition, overall negative German trade data (surplus narrowed, exports declined further while imports showed minor improvement) could contribute to negative near-term outlook.

The pair held firmly in red for the fourth consecutive week and broke below the support line of multi-month bear channel, bringing in focus next targets at 1.1130/00 (50% retracement of 1.0177/1.2082 uptrend / 200WMA / round-figure) which guard psychological support at 1.1000.

The EURUSD rides on very stretched (over FE 338.2%) third wave of five wave cycle from 1.1711 (Aug 21 top), with daily studies in full bearish setup (strong negative momentum / multiple MA bear-crosses), but with RSI being oversold for some time that warns of increased headwinds bears may face.

However, potential upticks are likely to be limited in current Euro-negative environment, with barriers at 1.1280/1.1320 zone (falling 10DMA / former low of June 24) to ideally cap and offer better levels to re-enter bearish market.

Res: 1.1235; 1.1280; 1.1320; 1.1355
Sup: 1.1160; 1.1130; 1.1100; 1.1065

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EUR/USD Talking Points:
The US Dollar is overbought and EUR/USD is oversold, and while those markers don’t demand definite reversal, it does raise the stakes for continuation.
So far, buyers have only been able to pose a minor bounce and as looked at in the webinar yesterday, there’s not yet evidence that there’s enough motivation to produce a reversal move.
I looked into this coming into the week, highlighting EUR/USD in the top five charts for the week ahead, and that theme remains of interest as the pair has pushed down to a fresh yearly low.

In yesterday’s webinar, there was a bounce in-play but as I said then, there wasn’t yet enough evidence to substantiate whether that bounce was just an oversold pullback or the start of something larger. At this stage, it seems it was more of the former than the latter, but there’s still potential given that price hasn’t yet taken out the Monday low.

For that to work and for a bounce to set up in the back-half of the week, bulls will need to show up and hold the low above 1.1161, which, so far, they have by 3.4 pips.

EUR/USD 30-Minute Chart
Chart prepared by James Stanley; data derived from Tradingview

EUR/USD Most Oversold in a Decade
As I often say in webinars, RSI isn’t a great timing indicator as a market can often get more oversold or overbought. And any oscillator, RSI included, is a lagging indicator on an already lagging variable (price), so it’s a bit like looking at the world through rose-colored glasses.

This isn’t to say that the indicator is completely worthless, however, as it can provide some good information. And perhaps more important than using it to get into trades is using it to stay out of markets in an extreme state of stress.

At a close below 20 last week, EUR/USD was more oversold than it had been since 2015. That prior instance was an extreme period of stress, but the sub-20 RSI read showed around a significant low, after which the pair was rangebound for much of the next two years.

EUR/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview

EUR/USD with Perspective
The daily chart highlights the theme well and RSI remains in oversold territory. But, given the prior element of divergence with the Monday low in price producing a higher-low via RSI, it illustrates just how stretched the move has become.

This is a deduction, however, and not quite a thesis that builds into a bullish backdrop: It simply sets the stage for which buyers can make a move and, at this point it’s still quite early to forecast a trend change.

There is, however, the possibility for reversal strategies if (and it’s a big ‘if’) that low can hold on the above shorter-term chart.

EUR/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro

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EUR/USD stabilised at 1.1234 on Wednesday. Investors are awaiting the release of the minutes from the Federal Reserve’s latest meeting, hoping for fresh signals on the future path of monetary policy.

Comments from Fed officials also remain in focus. Following weaker-than-expected PCE inflation and labour market data, the Fed’s rhetoric has become less hawkish. Markets now put the probability of rates remaining unchanged in October at almost 80%.

Meanwhile, investors continue to monitor the bond market following the recent sell-off. Pressure on Treasuries is being compounded by concerns over persistent inflation, growing fiscal risks and significant debt issuance linked to funding AI projects.

Oil, meanwhile, is rising amid increased Iranian attacks on tankers in the Strait of Hormuz and clashes between Saudi and Houthi forces. This is adding to inflation risks and sustaining concerns that the Fed may maintain a hawkish policy stance for longer.

Technical Analysis

On the H4 chart, EUR/USD remains in a steady downtrend. Earlier, the pair staged a corrective recovery to 1.1275, after which a new downward move developed, taking the price back to the 1.1244 area. The price remains below the descending resistance line, keeping the bearish scenario intact. Local consolidation is currently forming below 1.1244. The nearest downside target is 1.1210. A close below this level would open the way for a further decline towards 1.1173 and, within the broader structure, towards 1.1129. The MACD indicator remains in negative territory: the histogram is below zero despite the local weakening of downward momentum.

On the H1 chart, the corrective move ended around 1.1275, where buyers could not push the price above local resistance. The subsequent decline took the pair back to 1.1230, confirming continued selling pressure. The Stochastic oscillator is in the oversold zone below 20, so a short-term correction is possible before the decline resumes. As long as the price remains below 1.1244–1.1275, the main scenario today is a move towards 1.1210. A break below this support would strengthen downward momentum and open the way towards 1.1173. A return above 1.1275 would temporarily invalidate this short-term scenario. Selling remains the priority while the price holds below the descending resistance line.

Conclusion EUR/USD is holding steady as markets await the Fed’s meeting minutes for further policy clues. Recent weak PCE inflation and labour market data have softened the Fed’s tone, with the probability of rates remaining unchanged in October now at nearly 80%. However, persistent inflation concerns, fiscal risks and heavy debt issuance tied to AI funding continue to pressure Treasuries, while rising oil prices amid Middle East tensions add to inflation risks. Technically, the pair remains bearish below 1.1244–1.1275, with the next downside targets at 1.1210, 1.1173 and potentially 1.1129. A short-term correction is possible given oversold conditions, but the broader trend remains downward as long as the price holds below the descending resistance line.

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European Central Bank (ECB) flexibility is challenged by rising inflation. On the 6th of October ECB Chief Economist, Philip Lane, stated that they do not have strong evidence of a general second-round inflationary effect resulting from the energy price shock. Lane states that they will maintain a cautious, data-dependent, approach to policy.

GBP: BoE Tightening Risk Weighs on Fiscal Policy Sterling is relatively supported against its peers due to expectations the Bank of England (BoE) will further increase interest rates. The BoE believes inflation will rise above 4% in early 2023, and markets believe there is a high chance of a rate increase in November.

The prospect of further fiscal expenditure by the UK government poses a risk to already elevated UK bond yields. On October 28th the finance minister will outline his plans to maintain fiscal responsibility during these tough economic times.

GBP/USD Price Forecast

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U.S. Dollar Index Technical Analysis: DXY Holds 101.76 as 102.49 Remains the Next Upside Test

Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index is trading near 102.09 on the 2-hour chart, and what stands out to me is the fact that price continues to hold above the rising trendline and both moving averages despite the latest pullback to the 102.49 resistance area. Price action has formed a series of higher highs and higher lows.

102.49 is the first level of resistance, and a clear break above that would open 102.70 and 102.95 to the upside. The rising trendline and the 101.76 level come in as the first line of support, and beyond that 101.49 and 101.16 come in to play.

RSI has cooled from overbought territory, but is still in overbought territory, and as long as that remains the case, I will remain bullish on DXY. A break below 101.76 would negate the bullish case while a break above 102.49 would validate the case for a move to 102.70 and 102.95.

EUR/USD Price Chart – Source: Tradingview The EUR/USD is trading at 1.1231 on the daily chart and has extended lower and broken through the 1.1331 support area. In the short-term, the bearish outlook is intact while price is below both the moving averages and the bearish trend line. Add to that the recent break lower has pushed price toward the 1.1225 Fibonacci extension, and the larger picture is also bearish.

Support is located at 1.1225, and if broken, support at 1.1095, 1.1018 and 1.0950 would be next in line. Resistance would come in at 1.1331 and 1.1475, if the bulls took control.

RSI is also in oversold territory, indicating the decline is exhausting and a bounce should be expected. However, I am of the bearish camp until the Euro breaks and closes above 1.1331 and the bearish trend line. A close above 1.1475 would put a new long-term bullish view in place. A break below 1.1225 would confirm the bearish view and target 1.1095.

French Risk Has Brought the Euro to the Line; 1.1185 Decides Whether the Downtrend Accelerates What’s happening: EUR/USD fell to around 1.1160, its lowest since May 2025, before recovering to 1.12. French fiscal and political risk is the dominant Euro-specific pressure, while Spain’s snap election on November 29 has added a headline without comparable market stress. The pair pierced the 1.1185 Fibonacci projection but has not yet confirmed a break, even though Fed hike expectations have eased and French bond yields have stabilized somewhat.

Why it matters: Neither interest-rate differentials nor a generalized Eurozone panic explain the move; it is French-specific risk with broader Euro implications. A decisive loss of 1.1185 would strengthen the case that the decline from 1.2081 is developing into an impulsive medium-term downtrend, with the current leg from 1.1710 potentially entering its strongest phase. The next move around 1.1185 will determine whether the bearish trend is solidified and begins to accelerate.

EUR/USD has reached a point where today’s political headlines matter less for the size of the immediate move than for what could come next. The pair fell to around 1.1160, its lowest since May 2025, before recovering to 1.12. French fiscal and political risk remains the dominant Euro-specific pressure, while Spain’s snap election adds another headline without yet producing comparable market stress. France is identified as the main drag as EUR/USD hit a 17-month low, while Spanish equities largely shrugged off Prime Minister Pedro Sánchez’s call for a November 29 election.

The more important development is technical. EUR/USD has pierced 1.1185, the 100% projection of 1.1848 to 1.1323 from 1.1710, but has not yet confirmed a break. A decisive loss of that level would strengthen the case that the decline from 1.2081 is developing into an impulsive medium-term downtrend, with the current leg from 1.1710 potentially entering its strongest phase. In that sense, French political risk has brought the Euro to the line; the next move around 1.1185 will determine whether the broader bearish trend is solidified and begins to accelerate.

France Is the Core Risk, Spain Is Secondary Europe has two political stories today, but markets are not treating them equally.

France Fiscal Snapshot OAT-Bund spread: pushed above 100bp during September OAT-Bund spread: briefly above 150bp on Friday, before retreating France’s debt: around 119% of GDP France’s deficit: roughly 5.4%, which the government is trying to reduce through its 2027 budget In France, the repricing has been building for weeks. The OAT-Bund spread pushed above 100bp during September and surged to levels last seen during the Eurozone sovereign debt crisis period. The spread was briefly above 150bp on Friday, before retreating, as investors focused on France’s fiscal position and the difficulty of repairing it through a fragmented parliament ahead of the 2027 presidential election.

The fiscal backdrop explains why the political uncertainty carries market weight. Prime Minister Sébastien Lecornu’s government has proposed a combination of tax increases and spending restraint, but the legislation still faces a difficult parliamentary process.

The key point is that this is no longer simply a generic global bond-market selloff. France has developed its own risk premium. The widening relative to Germany—and the fact that French sovereign stress has at times exceeded Italy’s—shows investors differentiating between Eurozone credits rather than selling the bloc indiscriminately.

Spain is different.

Prime Minister Pedro Sánchez called an early election for November 29 after parliament rejected key housing measures, adding another layer of political uncertainty to Europe. But the market reaction has so far been restrained. Spanish equities remained positive on the day, while investors saw limited reason to worry about Spain’s finances given comparatively solid growth.

France vs Spain: How Markets Are Treating Each France Spain Political trigger Fragmented parliament and a difficult 2027 budget process Snap election on November 29 after parliament rejected key housing measures Fiscal backdrop Debt around 119% of GDP; deficit roughly 5.4% Limited reason to worry about finances given comparatively solid growth Market reaction OAT-Bund spread briefly above 150bp on Friday; CAC 40 underperforming Spanish equities positive on the day The distinction is simple:

France is being priced. Spain is being watched.

Bonds Stabilize, but Euro Keeps Falling That distinction also helps explain today’s cross-asset pattern.

French bonds opened under renewed pressure, but yields subsequently eased from their early levels and remained below last week’s peak. The OAT-Bund spread also pulled back from Friday’s extreme rather than extending immediately higher. That is important because today is not another acceleration of the bond shock.

Cross-Asset Moves EUR/USD: fresh 17-month low CAC 40: fell, underperforming the major European equity indices STOXX 600: advanced Spanish equities: gained DAX, FTSE and Ibex: firmer Instead, the incremental pressure is showing more clearly elsewhere. EUR/USD made a fresh 17-month low, while the CAC 40 underperformed the major European equity indices. Paris shares fell while the broader STOXX 600 advanced and Spanish equities gained.

The FX heat map adds another useful clue. The Euro is broadly weak against the Dollar, Sterling, Canadian Dollar and Australian Dollar, but there is no comparable cross-market surge into every traditional haven. That argues against treating today as a generalized systemic risk event.

French sovereign stress remains serious, but the immediate move looks more like a Euro-specific risk premium being expressed through the currency and French equities while the bond market pauses after last week’s repricing.

The Rate Story Alone Does Not Explain EUR/USD The usual interest-rate explanation is also incomplete.

Fed expectations have become less aggressive at the very front end after softer US labor data, with October hike probability sharply reduced. Normally, that should remove at least some Dollar support. Yet EUR/USD is still making new lows.

That suggests the Euro side of the equation matters increasingly. French fiscal uncertainty, fragmented sovereign pricing inside the monetary union, weak confidence around the durability of the regional recovery and elevated energy costs are creating a risk premium that ordinary rate-differential analysis does not fully capture.

This is particularly important because today’s Euro weakness is occurring even as French yields themselves stabilize somewhat. The market is no longer simply demanding a larger premium to hold OATs; the political and fiscal uncertainty is also being reflected in the currency.

That does not mean the bond problem has disappeared. It means today’s incremental repricing is being expressed more visibly elsewhere.

Why This Is Not Yet a Eurozone Panic There are several reasons not to overstate the move.

Four Reasons Not to Overstate It French yields are below last week’s extreme rather than accelerating through it. Spanish bonds and equities are not showing the same degree of stress. If France’s problems were rapidly becoming a broader Eurozone sovereign event, Spain and Italy would be expected to begin moving much more aggressively alongside it. Broader European equities are not collapsing. The CAC is the outlier, while DAX, FTSE and Ibex have been firmer. The currency heat map does not show the sort of uniform rush into defensive currencies associated with acute systemic stress. The right description is therefore French-specific risk with broader Euro implications, not contagion.

That distinction could change if the OAT-Bund spread drives decisively back through last week’s extremes while Bunds rally and peripheral spreads begin widening together. But that is not the configuration today.

French Bond Spread, Budget and Spain: What Could Change the Picture The first test remains the French bond spread. Another sustained move above the 140–150bp area, particularly if accompanied by renewed demand for Bunds and widening in Spain and Italy, would indicate that the stress is broadening rather than merely consolidating.

The second is the French budget process. Markets need evidence that the 2027 fiscal package can survive a fragmented parliament and produce a credible path toward stabilizing the debt burden. France’s proposed measures are substantial, but parliamentary amendments are expected and implementation remains central to the credibility question.

Spain’s November 29 election is a secondary political catalyst, but the more immediate question is whether Spanish assets continue to distinguish themselves from France.

For EUR/USD, however, the most important signal may arrive before any of those political events. It is already sitting on the level that can decide whether the existing decline becomes something materially larger.

EUR/USD Technical Outlook: 1.1185 Is the Decision Point EUR/USD is testing 1.1185, the 100% projection of the decline from 1.1848 to 1.1323, projected from 1.1710.

Today’s 1.1160 low pierced that level intraday, but EUR/USD recovered back above it. That makes the current setup a warning rather than a confirmed breakdown.

A decisive daily close below 1.1185 would materially change the technical picture. The decline from 1.2081 could then increasingly be interpreted as an impulsive sequence:

1.2081 to 1.1408, rebound to 1.1848, fall to 1.1323, rebound to 1.1710, followed by the current decline. That is, a 1-2-i-ii.

Under that count, the fall from 1.1710 would represent the potentially powerful wave iii of the developing bearish sequence.

Key EUR/USD Levels Level Significance 1.1710 A break above invalidates the impulsive count 1.1323 First critical resistance on any recovery; a sustained recovery above it would weaken the immediate impulsive count 1.1185 100% projection of 1.1848 to 1.1323 from 1.1710; the decision point 1.0904 Larger 61.8% retracement 1.0861 161.8% projection, the next major downside projection, close to the 61.8% retracement 1.0759 Next projection below the 1.0861–1.0904 zone The next major projection would be 1.0861, the 161.8% projection. That sits close to the larger 61.8% retracement around 1.0904, creating a significant downside target zone. Below there, the next projection lies around 1.0759.

The larger implication is more important still. A confirmed impulsive fall from 1.2081 would strengthen the case that EUR/USD has begun reversing the entire three-wave corrective rise from the 0.9534 low of 2022. That would represent a meaningful medium-term trend change rather than merely another pullback inside the previous recovery.

For now, however, that conclusion is premature. Daily RSI is already deeply oversold, and EUR/USD has recovered from below 1.1185 intraday. A daily close beneath the level is the first confirmation; a weekly close below 1.1185 would carry considerably more weight.

On any recovery, 1.1323 has become the first critical resistance. As long as that former support holds as resistance, downside risk remains dominant. A sustained recovery above 1.1323 would weaken the immediate impulsive count, while a break above 1.1710 would invalidate it.

French political risk has helped drive EUR/USD to this point. Whether 1.1185 now gives way will determine whether the Euro’s medium-term decline merely continues—or begins to accelerate.

Related Coverage Europe: Data and Sentiment Eurozone Sentix Slips as Expectations Fall, France Replaces Germany as the Main Concern: investor sentiment data pointing to the same geographic shift in worry that is driving the Euro-specific risk premium. Eurozone PMI Hits 41-Month High as Growth Broadens and Price Pressures Reheat: September growth at a 41-month high, but with stronger selling prices and backlogs that make the release notably more hawkish. Eurozone PPI Re-Accelerates as Energy Shock Spills Into Broader Producer Costs: August producer inflation re-accelerated, with stronger ex-energy prices suggesting pipeline pressure is broadening beyond energy. UK Composite PMI Falls to 52.0 as Growth Slows and Costs Rise: services still expanding but with slower new orders, falling employment and higher fuel and payroll costs. Gold, Yen and Asia-Pacific Gold: Fed Hike Delay Isn’t Relief, FOMC Minutes Put the Rate Plateau to the Test: the Gold angle on collapsed October hike odds, with Wednesday’s FOMC minutes testing the extended tightening path priced into 2027. Nikkei Eyes Record High, But Four Forces Stand Between USD/JPY and 164: why this equity breakout may not repeat the last run in USD/JPY, with 160 now inside a tougher resistance zone. BoJ Uchida: AI’s Demand Shock Has Arrived Before Its Productivity Payoff: the BoJ Deputy Governor on AI’s first macro impact arriving through demand, prices and easier financial conditions. Japan PMI Growth Slows, But Hiring and Price Pressures Stay Firm: a weaker services headline, but with faster hiring, rising backlogs and exceptionally strong selling-price inflation underneath. Australia PMI Services Falls to 51.9 as Growth Slows and Price Pressures Rise: softer activity and falling employment paired with faster input and output-price growth. FAQ Why is EUR/USD making new lows when Fed hike expectations have eased? Fed expectations have become less aggressive at the front end after softer US labor data, which should normally remove some Dollar support. Yet EUR/USD fell to around 1.1160, its lowest since May 2025. French fiscal uncertainty, fragmented sovereign pricing inside the monetary union, weak confidence in the regional recovery and elevated energy costs are creating a risk premium that rate-differential analysis does not fully capture, and that premium is now also being reflected in the currency.

Is France’s bond stress turning into a Eurozone panic? Not yet. French yields and the OAT-Bund spread have pulled back from last week’s extremes, Spanish bonds and equities are not showing the same stress, broader European equities are not collapsing and the currency heat map shows no uniform rush into defensive currencies. The better description is French-specific risk with broader Euro implications, not contagion. That could change if the OAT-Bund spread drives decisively back through last week’s extremes while Bunds rally and peripheral spreads begin widening together.

What would a break below 1.1185 mean for EUR/USD? 1.1185 is the 100% projection of 1.1848 to 1.1323 from 1.1710, and EUR/USD pierced it intraday without confirming a break. A decisive daily close below it would support reading the decline from 1.2081 as an impulsive sequence, with the fall from 1.1710 as a potentially powerful wave iii. The next projection is 1.0861, close to the 61.8% retracement around 1.0904, with 1.0759 below that. A weekly close below 1.1185 would carry considerably more weight, while a break above 1.1710 would invalidate the count.

Key Takeaways EUR/USD fell to around 1.1160, its lowest since May 2025, before recovering to 1.12, with French fiscal and political risk as the dominant Euro-specific pressure. France is being priced and Spain is being watched: the OAT-Bund spread was briefly above 150bp on Friday and French debt is around 119% of GDP, while Spain’s November 29 election drew a restrained market reaction. Today is not another acceleration of the bond shock: yields and the spread pulled back, and the pressure is showing more clearly in EUR/USD and the CAC 40. Rates do not explain the move: Fed expectations have become less aggressive, yet EUR/USD is still making new lows. This is French-specific risk with broader Euro implications, not contagion, though that could change if the spread breaks back through last week’s extremes while peripheral spreads widen with it. EUR/USD pierced 1.1185 but has not confirmed a break; a decisive daily close below would strengthen the impulsive count, and a weekly close below would carry considerably more weight. Below 1.1185 the next projection is 1.0861, near the 61.8% retracement around 1.0904, then 1.0759; 1.1323 is first resistance and a break above 1.1710 would invalidate the count. What to Watch Next For EUR/USD, the decision point is 1.1185: a daily close below is the first confirmation and a weekly close below would carry considerably more weight, while 1.1323 is the first resistance on any recovery. On the political side, watch whether the French bond spread makes another sustained move above the 140–150bp area, how the 2027 budget fares in a fragmented parliament, and whether Spanish assets keep distinguishing themselves from France ahead of the November 29 election.

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The EUR/USD exchange rate continued its strong sell-off today, reaching its lowest level in 17 months as concerns about the European fiscal health accelerated. It tumbled to 1.1162, down by over 4.67% from its highest point in September, with focus now shifting to the upcoming Federal Reserve minutes.

The EUR/USD pair tumbled sharply as investors remained concerned about Europe’s fiscal health. Recent data shows that government bond yields have surged in the region. In France, the ten-year yield jumped to a multi-year high of 4.99% last week. Similarly, in Germany and other countries, yields have continued rising.

The pair is also falling as Pedro Sanchez, the Spanish Prime Minister, considers calling for an early election after losing a crucial housing vote. According to Bloomberg, the cabinet and other high-ranking government officials support calling for an early election. This comes at a time when France has seen substantial protests in the past few weeks. In a note, a Lombard Odier analyst said:

“Bond and currency markets are clearly signaling investor discomfort about the rising instability of the French government and erosion in the country’s fiscal anchor ahead of the elections in 2027.”

These developments come at a time when many European countries are struggling, with the European Central Bank (ECB) predicting that it will grow by 0.9% this year. That growth will be much lower than the current inflation rate, which has remained above 2% amid the US-Iran crisis. 

The next important catalyst for the EUR/USD pair will be the upcoming minutes of the last meeting by Federal Reserve. These minutes, which will come out on Wednesday, will provide more hints on what to expect in the coming meeting.

However, these minutes will likely have a mild impact on the pair because the situation has changed substantially since the last meeting. For example, a report released last week showed that the core Personal Consumption Expenditure (PCE) softened in August. 

Another report released on Friday showed that the economy created just 29,000 jobs last month, much lower than the expected 90,000. The unemployment rate rose to 4.2% during the month. 

Therefore, these numbers mean that the Fed will not have an incentive to hike rates again this year as analysts expected.

EURUSD chart | Source: TradingView

The weekly chart shows that the EUR/USD pair has slumped in the past few weeks. It has already crashed below the important support level of 1.1391, its lowest level in July last year and March and April this year. Moving below that level confirmed the bearish breakout. 

The pair has now moved to the 38.2% Fibonacci Retracement level. It also slumped below the 50-week moving average, while the Supertrend indicator has turned red. Therefore, the path of the least resistance for the pair is bearish, with the next key target to watch being the psychological level of 1.100.

The Euro's recovery prospects fade as Rabobank lowers EUR/USD forecasts, citing French debt risks and the US Dollar’s enduring appeal. Rabobank has cut its Euro forecasts even after Friday's weak US jobs report, arguing that Europe's growing problems leave investors with few attractive alternatives to the Dollar.

Latest — Exchange Rates:

Euro to Dollar (EUR/USD): 1.125224 (+0.03%)

Pound to Dollar (GBP/USD): 1.323954 (+0.31%)

Dollar to Yen (USD/JPY): 157.85594 (-0.05%)

The bank's 2 October note shifts the focus from interest-rate differences to the risk that French debt concerns could drive money out of Euro-denominated assets.

"We have revised our EUR forecasts lower across the board and now see EUR/USD at 1.13 on a 3-month view, compared with a previous forecast of 1.16. Our 12-month forecast now stands at 1.12 compared with a previous forecast of 1.18."

The Euro to US Dollar exchange rate (EUR/USD) closed Friday near 1.1252, up just 0.03% on the day after falling 2.50% in September.

The revised three-month forecast is therefore slightly above the latest rate, while 1.12 implies only modest further weakness over a year.

The larger change is Rabobank's abandonment of its previous expectation for a recovery towards 1.18.

Image: Three month EUR to USD exchange rate chart When French bond selling becomes a Euro problem Senior FX strategist Jane Foley distinguishes the latest French market stress from earlier budget disputes, when investors appeared to sell French government bonds and buy other Euro-denominated debt.

That kept the money within the currency area, limiting the sustained impact on the Euro.

Rabobank says the recent widening in the gap between French and German 10-year borrowing costs has been sharper, returning the spread to levels last seen during the 2011-12 Eurozone debt crisis.

"This raises the prospect that the EUR could be impacted by outflows."

Official French figures released on 29 September put public debt at 119.0% of GDP in the second quarter, up from 117.5% in the first.

Foley also highlights low European gas storage, expensive energy and competition from China as constraints on the Euro's appeal.

"The Eurozone is an energy importer, and the combination of increased energy prices and higher interest rates will contain demand."

Weak US jobs do not settle the currency outlook The Dollar's initial retreat after Friday's payroll release was already reflected in Rabobank's assessment.

US employers added just 29,000 jobs in September, while revisions removed 60,000 from the previous two months.

Foley acknowledged the profit-taking but remained cautious about its extent.

"However, in the current environment we would expect pullbacks in long USD positions to be shallow."

She argues that the currency retains structural support from its role in trade and payments.

"In our view, safe haven demand for the USD is linked to its importance across the globe as an invoicing currency and its interwoven position within the global payments system. This could take decades to alter significantly."

At Exchange Rates UK Research we believe that Rabobank's downgrade leaves little room for a lasting Euro recovery unless confidence in European assets improves, even if weaker US data reduce support from American interest rates.

EUR: Inflation Returns as French Fiscal Stress Adds Pressure Rising political risk in the EU and heightened inflation pose challenges to the euro. The ECB is firmly focused on containing inflation. It looks increasingly likely that the ECB could be forced to act further. Rising inflationary pressures will probably push the ECB to take more aggressive action. Yet, the ECB’s Governing Council remains unconvinced that there is a significant increase in underlying pressures. Regarding price and wage pressures, many officials believe that there is not enough evidence to support that they will persist.

French-German yield spreads have increased this month. Concerns over France’s finances are increasing, including high levels of public debt and political risk.

GBP: BoE Debate Intensifies as Fiscal Concerns Build Strikes have disrupted the energy supply in Britain. The strike is expected to cause significant disruption to British production and further elevate inflation. Longer-term expectations are for inflation to return to target, and the Bank of England remains focused on controlling it. BoE officials have stated there will be a good case to increase interest rates.

Others have stated they are happy to wait and see if there is further evidence of second-round effects. A fiscal risk premium has increased in the UK as there is increased uncertainty ahead of the October 28 budget.

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U.S. Dollar Index Technical Analysis: DXY Holds 101.76 as 101.94 Becomes the First Recovery Test

EUR/USD Price Chart – Source: Tradingview The EUR/USD pair is trading at 1.1260 on the 2-hour chart as it rebounds from the latest decline. I see price trading below both moving averages, and still within a longer-term bearish move. The bounce, however, is improving momentum in the near-term, and I am looking for the first Fibonacci level at 1.1278 to be tested.

The next resistance would be at 1.1298, with 1.1317 above that. The support would be at 1.1254, and then 1.1215 and 1.1189.

RSI is moving up from the oversold area, but is still below the center line. This means the bullish momentum is not confirming a trend reversal, and I would expect price to continue falling, while staying below 1.1278 and 1.1298. I would see a break above 1.1317 as bullish and a break below 1.1254 as more bears coming in toward 1.1215.

Bears accelerated on Thursday, extending larger downtrend to the lowest since late May 2025, pressured by a cocktail of factors, such as negative impact from rising oil prices on inflation and already weakened bloc’s economy, political uncertainty and rising dollar.

EURUSD broke below 1.1300 handle (for the first time in 17 months), to hit 1.1265 low (261.8% Fibo expansion of extended third wave of five wave cycle from 1.1711, Aug 21 peak), remaining on track for the third consecutive weekly loss.

Firmly bearish daily studies contribute to negative near-term outlook, although overstretched 14-d momentum and oversold RSI suggest that bears may face increased headwinds.

Potential pause in a downtrend is likely to result in consolidation / limited correction in current increasingly negative fundamentals, with former low at 1.1324 (Jun 24) marking solid resistance, followed by descending 10DMA (1.1387) which should cap upticks and provide better levels to join bearish market for attacks at 1.1200 (round figure) and 1.1130 (50% retracement of 1.0177/1.2082 rally).

Res: 1.1324; 1.1355; 1.1387; 1.1411
Sup: 1.1265; 1.1200; 1.1130; 1.1100

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An increasing divergence between short-term and long-term interest rates has become more positive for the U.S. Dollar. Falling longer-term U.S. Treasury yields would help to alleviate the current high inflation and bond market pressures. However, U.S. treasuries have come under pressure due to increased government spending and borrowing. The U.S. Dollar Index reached its highest level in more than three months, on September 15.

Difficult conditions persist for the euro. Recent developments have witnessed a build up in inflation throughout the eurozone. As usual, the ECB is taking a dovish stance despite rising inflation, citing that wage inflation has not materially increased. The euro fell by the most since July 2022 in September.

British economic data showed that the UK economy grew by more than expected in the last quarter. However, tighter financial conditions are expected to dampen economic activity going forward. Markets expect interest rate hikes by the BOE in November and February.

The U.S. dollar is expected to appreciate against the euro and British pound. The Employment Situation Report, which is expected to show strong non-farm payroll growth, could increase market uncertainty ahead of the weekend.

U.S. Dollar Index Technical Analysis: DXY Holds 101.45 Breakout as 101.78 Becomes the Next Upside Test

Looking at RSI on the 2 hour time frame, it supports the overall bullish trend and momentum with values currently above 50. If the bullish trend remains, support would come in at 101.23 and 100.93. A break below 101.45 would negate the bullish case for DXY. If the trend line continues higher, subsequent resistance would come in at 101.78, with a break above that level possibly targeting 102.00.

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GBP/USD Technical Analysis: Sterling Slips Below 1.3250 as 1.3205 Support Comes Back Into Focus

EUR/USD Price Chart – Source: Tradingview The EUR/USD is currently at 1.1301 on the 2 hour chart. I see that the pair broke 1.1312 support. Below the support, I see no major support until 1.1283. Once that level is broken, then support is located at 1.1256, and 1.1230.

From the recent movement of EUR/USD, the pair has formed a series of lower highs and lower lows. Because of this, the overall trend is down. A break of 1.1283 changes the trend to up, and then 1.1312 is the first major resistance.

The first support I am watching is 1.1283. Expect 1.1256 below. Limit orders to buy are now filled at 1.1312, above which 1.1350 and 1.1373 become key levels.

RSI is near the 30 level and is in the bearish territory, signaling that further declines may be limited. I am bearish and expect downside to the 1.1312/50 area, which is reinforced by a lower trendline, and a bearish channel. A move above the 1.1373 area changes the near-term bias. I shall wait for a break below 1.1283 for another target at 1.1256.

The euro continues to face a challenging environment in the short term. The currency has struggled to regain ground against a U.S. dollar that remains firmly supported, a dynamic reflected in EUR/USD, which has now recorded three consecutive losing sessions and a decline of roughly 0.6%. More importantly, selling pressure has persisted even after the latest U.S. inflation data was released, suggesting that the market continues to favor the dollar over the euro. As long as this backdrop remains in place, bearish pressure could continue to play an important role in EUR/USD price action over the coming sessions.

PCE Takes Center Stage
One of the most important events of the trading session was the release of the U.S. Core Personal Consumption Expenditures (Core PCE) report, one of the Federal Reserve's preferred inflation gauges and a key indicator of consumer price trends.

The monthly reading came in at 0.2%, below market expectations of 0.3%. At first glance, this provided some relief by suggesting a modest easing in short-term inflation pressures. However, the annual measure remains close to 3.0%, a level that has shown little change since June. While inflation is no longer accelerating significantly, it also remains well above the Federal Reserve's long-term target.

As a result, markets have slightly reduced expectations of a more aggressive Fed. According to CME Group probabilities, there is now roughly a 60% chance that interest rates will remain unchanged at 4.00% during the October 28 meeting.

Source: TradingEconomics

Even so, the positive impact on the euro has been limited because the U.S. bond market continues to show remarkable strength. Despite the moderation in rate expectations, 10-year Treasury yields continue to move higher and are now approaching the 5.3% area, levels not seen in decades. Meanwhile, European bond yields have also recovered recently, but they remain significantly lower, trading closer to 4.0%.

This yield differential continues to support the relative attractiveness of U.S. assets and helps explain why demand for the dollar remains strong despite the softer inflation release.

Source: TradingEconomics

Against this backdrop, the euro continues to face a difficult environment. Although the inflation data partially reduced expectations of a more aggressive Federal Reserve, the bond yield differential continues to favor the United States. As long as this situation remains unchanged, the euro may continue to struggle to attract consistent demand, leaving the current selling pressure around EUR/USD in place over the coming sessions.

Is the ECB Still Relevant?
It is also important to monitor developments surrounding the European Central Bank (ECB). Current market probabilities continue to reflect a relatively neutral stance from policymakers. Expectations for the October 28 meeting indicate roughly a 70% probability that the ECB's deposit rate will remain unchanged at 2.5%.

These expectations are largely driven by the fact that inflation pressures across Europe have not been strong enough to justify another aggressive tightening cycle. In addition, ECB officials have maintained a relatively cautious tone in recent weeks, reinforcing expectations of policy stability.

Source: ECBWATCH

This remains important because part of the dollar's recent strength continues to be supported by the interest-rate differential between the United States and Europe. Unless markets begin to see signs of a more hawkish ECB willing to narrow that gap, dollar-denominated assets may continue to retain a meaningful relative advantage. Under this scenario, the euro could remain under pressure, leaving EUR/USD vulnerable to further downside in the near term.

EUR/USD Technical Forecast

Source: StoneX, Tradingview

The broad trading range is entering a risk zone: For much of 2026, EUR/USD has traded within a wide consolidation range that has dominated price action and prevented the development of a sustained directional trend. However, recent weakness has placed the lower boundary of that structure under increasing pressure. If selling pressure continues to build, a bearish breakout could emerge and open the door to a more established downward trend.

 
MACD: The MACD histogram continues to trade below the 0 neutral line, indicating that short-term moving-average strength remains biased to the downside. As long as this behavior persists, selling pressure may continue to dominate.

 
RSI: A similar picture can be observed in the RSI, which remains below the 50 neutral level. This reading reinforces the relevance of bearish momentum within the market. However, the indicator is now also trading below the 30 oversold threshold, suggesting that recent selling pressure may have become excessive and could create room for short-term bullish corrections.

 
Key Levels:

1.15352 – Key Resistance: This level coincides with the 50-period simple moving average and represents the most important barrier for recovery attempts. Price action returning toward this area could reinforce the importance of the broad trading range that has dominated much of the year and restore a more neutral tone to the chart.

 
1.14130 – Near-Term Barrier: A key retracement area observed over recent weeks that could become the primary reference to monitor in the event of short-term bullish corrections.

 
1.12602 – Critical Support: A level not seen since May 2025 that represents the most important downside barrier below the current trading range. Sustained moves toward this area could confirm the end of the broader consolidation structure and open the door to a more established bearish trend.

 
Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25