Track market-moving stories before they get noisy

The single currency alternated gains and losses against the US Dollar (USD) this week, prompting EUR/USD to stabilise around the 1.1200 neighbourhood on Friday, while remaining unable to sustain its earlier bull run toward the 1.1260 zone. On the monthly chart, the second drop in a row appears almost unavoidable.

Furthermore, spot has given away around six big figures since its peak past 1.1700 in the summer, coming under increasing selling pressure since then in tandem with the strong bounce in the Greenback.

On the latter, the US Dollar has traded on the back foot this week, as the ongoing bullish move appears to have taken a breather alongside alternating moods regarding developments from the Middle East crisis. 

Next week could be critical for the pair in light of both the European Central Bank (ECB) and Federal Reserve (Fed) meetings, where both central banks are expected to keep a steady hand this month.

No news is hardly good newsGeopolitical tensions remain stubbornly elevated. The familiar US-Iran standoff over the Strait of Hormuz shows little sign of resolution, while the ongoing Russia-Ukraine conflict adds another layer of uncertainty, keeping risk aversion alive and safe-haven demand supported.

Energy prices put the ECB back on the defensiveThe geopolitical fallout is increasingly visible in energy markets. Crude Oil prices continue to climb, European fuel costs are rising, and gas price forecasts face repeated upward revisions. For the energy-dependent Eurozone, this represents more than another squeeze on household budgets: it threatens to turn an external price shock into a more persistent inflation problem.

That is precisely where the European Central Bank faces its biggest challenge. Policymakers can look through a temporary jump in energy prices, but not if higher costs spread into wages, services and inflation expectations. With growth already vulnerable to expensive energy imports, the ECB risks having to tighten policy into a weakening economy simply to prevent inflation from becoming entrenched. The longer the energy shock persists, the stronger the case for additional tightening becomes. Markets are already pricing in around 18 basis points of further rate hikes by year-end.

Now, about inflation…According to Friday’s ECB survey, Eurozone consumers’ inflation expectations rose slightly over the 12-month horizon in September, while longer-term expectations remained unchanged. The survey points to persistent upside risks for the ECB, although it does not yet suggest a fresh deterioration in medium-term expectations.

Inflation expectations for the next year increased to 3.1% from 3.0% in August. Expectations three years ahead held at 2.9%, while the five-year measure remained unchanged at 2.5%.

The latest survey is mildly hawkish for monetary policy. 

Near-term expectations remain elevated and above the bank’s 2% target, but the stability of the three- and five-year measures suggests that longer-term expectations have not materially de-anchored. The ECB will nevertheless remain alert to the risk that persistent energy and supply pressures may begin to influence broader price-setting behaviour.

Crowded shorts meet a surprising options divergenceEUR bearish positioning intensified in the week ending October 13, according to Commodity Futures Trading Commission (CFTC) data.

That said, non-commercial net shorts increased to around 137.6K contracts, while the weekly change deteriorated to -38,241 contracts from -36,076. The four-week change tumbled to around -110.6K contracts, confirming that bearish speculative positioning continues to deepen.

Also, open interest rose to around 874.6K contracts. The deeper net shorts, combined with a slightly higher participation, suggest a continued bearish positioning, though the modest increase in open interest implies the latest move was not accompanied by a significant expansion in overall market activity.

The speculative exposure plummeted to -15.73% (previously -11.41%), and its percentile dropped to 0 (from 0.7). The Net Position Percentile also remained at 0. Both measures are now at the most bearish levels in the five-year reference period, showing that EUR positioning is historically extreme both in absolute terms and relative to open interest.

However, the options market presents a contrasting picture. The one-month 25-delta Risk Reversal was -0.531 volatility points on October 22, implying that EUR puts are still priced higher than equivalent calls. But the reading is at the 30.7th percentile of its five-year distribution, indicating that the downside skew is quite moderate compared with the extremely bearish positioning in futures markets.

More importantly, option pricing has now become decidedly less bearish compared to EUR/USD spot performance. The pair has dropped 1.45% over the last month, but Risk Reversals were higher by 0.114 volatility points. Historically, a decline of such magnitude would have implied a deterioration of about 0.223 volatility points based on their history.

Instead, the positive deviation of 0.337 volatility points is at the 89.5th percentile of the out-of-sample distribution. This implies that options have repriced the EUR much more positively than spot moves would imply in isolation, creating a large divergence between speculative futures positioning and options sentiment.

That said, the latest weekly Risk Reversal change of -0.082 volatility points suggests that some demand on the downside has returned, meaning the improvement in options sentiment is not yet firmly established across all time horizons.

Overall, the positioning on the EUR remains decisively bearish, but the divergence between futures and options is something to watch. Speculative shorts are exceptionally extended, while options markets are displaying considerably less downside concern than the EUR’s recent weakness would normally suggest. This combination raises the risk of a short-covering rebound if bearish momentum begins to fade, although the continued deterioration in weekly futures positioning means that a sustained reversal remains unconfirmed.

What’s in store for EUR/USD?The coming week may be key for EUR/USD: preliminary inflation figures from Germany and the Euroland will provide fresh clues on whether the recent energy-induced price pressures are beginning to feed through to inflation expectations.

In addition, the ECB is widely anticipated to leave its policy rates unchanged at its meeting on Thursday, while the usual press conference by President Christine Lagarde is expected to highlight persistent energy-driven inflation.

Across the Atlantic, the focus will be on the FOMC gathering on Wednesday, with the Federal Reserve (Fed) also seen leaving its Fed Funds Target Range (FFTR) at 3.75%-4.00%. Data-wise, investors are also expected to keep their focus on inflation measured by the Personal Consumption Expenditure (PCE) and another estimate of the Q3 GDP Growth Rate.

Too bearish to fall, too weak to rally?While the Euro may be near a level where selling is becoming more difficult, that doesn’t necessarily mean the overall bearish trend is losing momentum. The pair stays close to 1.1200 after giving up some six big figures from summer highs. The short-term outlook is fragile, with the Greenback holding a bid amid relatively solid US fundamentals, higher Treasury yields and ongoing geopolitical uncertainty.

Still, positioning suggests the next move may not be entirely smooth. Speculative EUR shorts are at 5-year extremes, and options markets are showing much less conviction in the bearish theme than the recent decline in spot would imply. That divergence makes spot more and more susceptible to a short-covering rally if next week's Fed meeting turns out to be less hawkish than what investors are currently expecting.

However, a recovery driven primarily by position adjustment would hardly qualify as a genuine change in trend. The Eurozone remains particularly exposed to elevated energy prices, and while those pressures could keep the ECB leaning towards further tightening, they also threaten to undermine growth. That uncomfortable combination limits the extent to which a hawkish ECB can provide lasting support for the single currency.

Looking beyond next week's central bank meetings, the balance of risks therefore remains tilted to the downside. A sustained recovery would likely require a meaningful retreat in US yields, a broader improvement in risk appetite and convincing evidence that the Fed's tightening cycle is approaching its end. Without those catalysts, any rebound towards the 1.1260 area could struggle to attract sustained buying interest, leaving the 1.1000 psychological threshold as a plausible medium-term destination.

For now, the Euro may be due for a bounce, but the burden of proof remains firmly on the bulls.

Inflation FAQs

Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.

Key Points:EUR/USD pulled back towards 1.1200 as traders focused on the strong rally in the oil markets. GBP/USD moved lower as UK Retail Sales missed analyst expectations. USD/JPY rebounded amid rising Treasury yields.

U.S. Dollar Moves Higher Ahead Of The Weekend

DXY 231026 4h Chart U.S. Dollar Index gains ground as traders focus on PMI reports. Manufacturing PMI increased from 55.9 in September to 56.0 in October, compared to analyst forecast of 55.5. Services PMI decreased from 58.8 to 57.9, compared to analyst consensus of 58. Numbers above 50 show expansion.

Traders also had a chance to take a look at the Michigan Consumer Sentiment report. The report showed that Michigan Consumer Sentiment declined from 48.1 in September to 48.0 in October, compared to analyst forecast of 46.3.

In case U.S. Dollar Index manages to settle above the 50 MA at 101.89, it will head towards the next resistance level, which is located in the 102.35 – 102.50 range. On the support side, a successful test of the support at 101.50 – 101.65 will open the way to the test of the next support at 100.85 – 101.00.

EUR/USD Pulls Back As Oil Prices Test New Highs

EUR/USD 231026 4h Chart EUR/USD is losing ground as traders focus on weaker-than-expected PMI data from the EU. Composite PMI decreased from 53.1 in September to 51.9 in October, compared to analyst forecast of 52.7.

Traders also focused on the strong rally in the oil markets. Oil prices gained 3% as traders worried that U.S. and Israel would restart the military operation against Iran this weekend. The rally in the oil markets served as a negative catalyst for the European currency.

Currently, EUR/USD is trying to settle below the support level at 1.1175 – 1.1190. In case this attempt is successful, EUR/USD will move towards the next support, which is located in the 1.1100 – 1.1115 range.

GBP/USD Retreats As UK Retail Sales Miss Estimates

GBP/USD 231026 4h Chart GBP/USD is losing ground as traders focus on the disappointing UK Retail Sales report. The report showed that Retail Sales decreased by -0.4% month-over-month in September, compared to analyst forecast of -0.1%. On a year-over-year basis, UK Retail Sales grew by +0.8%.

GBP/USD failed to settle above the resistance level at 1.3385 – 1.3400 and is trying to settle below the 1.3370 level. In case this attempt is successful, GBP/USD will head towards the 50 MA at 1.3323. A move below the 50 MA will open the way to the test of the support at 1.3285 – 1.3300.

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

USD/CAD Remains Under Pressure

USD/CAD 231026 4h Chart USD/CAD tested new lows despite the pullback in precious metals markets. The rally in the oil markets did not put pressure on the Canadian dollar. Other commodity-related currencies have also gained some ground in today’s trading session.

In case USD/CAD manages to settle below the support level at 1.3985 – 1.4000, it will head towards the next support at 1.3900 – 1.3915. RSI has recently moved back into moderate territory, so there is enough room to gain momentum in the near term.

USD/JPY Rebounds As Treasury Yields Rise

USD/JPY 231026 4h Chart USD/JPY moved higher as traders reacted to rising Treasury yields. The yield of 2-year Treasuries climbed towards the 4.68% level, while the yield of 10-year Treasuries settled near 4.99%.

If USD/JPY climbs back above the 157.00 level, it will head towards the strong resistance level at 158.00 – 158.50. On the support side, a move below the 156.00 level will open the way to the test of the support at 155.00 – 155.50.

If you’d like to know more about how to trade forex, please visit our educational area.

Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.

The US Dollar is attempting to resume its upward trend against the backdrop of a sharp fall in Treasury bond yields. The DXY is being supported by the relentless rise in oil prices and the weakness of the euro, which accounts for the largest share of the basket of major currencies. Capital outflows fuelled by a sell-off in French assets and rumours that the ECB may intervene in the debt markets are keeping EURUSD under pressure.

The share of non-residents in the French bond market stands at 55%, whilst in the US it is a more modest 30-33%, not to mention Japan with its 13%. According to Barclays estimates, around 31% of French debt is held by non-European investors. The sell-off in French assets directly leads to capital outflows and contributes to the weakening of the euro against major global currencies. Furthermore, market participants are increasingly discussing options for ECB intervention to quell the panic in the debt market.

Initially, the European Central Bank may resort to verbal interventions, followed by a reduction in the volume of bond sales, thereby constituting a policy easing. Finally, the TPI, a programme for buying the government bonds of stressed countries, appears to be a last resort. The latter two measures are, in a sense, monetary stimuli that increase the supply of euros, which, amid Fed tightening, is likely to put pressure on EURUSD.

Meanwhile, the Swiss franc and the Japanese yen have reverted to their roles as safe-haven assets amid the French budget crisis, sell-offs in technology stocks, fears of an escalation of the conflict in the Middle East and uncertainty surrounding the US midterm elections. The return of 10-year Treasury yields to below 5% pushed USDJPY down to five-week lows, but the pair rebounded from those levels on the back of rising Brent prices.

According to Claus Vistesen of Pantheon Macroeconomics, between 10% and 15% of French debt is held by Japanese investors, who are increasingly turning their attention to Japanese bonds following the Bank of Japan’s monetary tightening and rising demand for safe havens. The natural consequence was a weakening of EURJPY to 12-month lows, a 5.7% decline since the end of August. A peak has formed near 188, echoing the 1990 high area. At that time, it marked a global reversal, followed by a 14% decline over eight weeks, a drop of more than 20% over the following year, and a fall of nearly 50% over the next 10 years.

However, with a series of meetings by key central banks scheduled for the final week of October, the likelihood of consolidation and a wait-and-see approach in the Forex market is increasing.

Summary: EUR/USD is under pressure from French capital outflows and possible ECB intervention, while the yen and franc gain as safe havens. Consolidation is likely ahead of central bank meetings. 

Markets also stripped almost a full quarter-point rate hike out of next year’s Fed pricing, on worries that a bursting AI bubble could derail the data center boom. Fewer expected hikes make holding dollars less rewarding, and that takes away part of the rate edge that has kept traders long the dollar. The yen and Swiss franc, the currencies investors usually buy in a scare, gained. The Fed is still expected to keep rates on hold at its October 27-28 meeting.

Euro: France’s Premium Hits a 15-Year High Softer US rate bets should have helped the euro, yet it has stayed flat around 1.12 because France is now the bigger worry. The premium investors demand to hold French 10-year bonds over German Bunds, meaning the extra interest France pays compared with Germany, the euro zone’s benchmark borrower, widened to a 15-year high on Thursday. That is the widest since November 2011, during the euro zone debt crisis, Reuters reported. France’s 10-year yield reached its highest level since July 2002, and the gap also widened for Belgium, Italy, Spain and Greece.

There is no easy rescue either. France is under an EU excessive deficit procedure, a formal EU process for countries whose budget deficit is too large, so it may not qualify for the ECB’s Transmission Protection Instrument, the central bank’s emergency tool for calming bond markets. ECB President Christine Lagarde has said the fix for France’s finances must be homegrown, which leaves the euro carrying that risk on its own.

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 Pound: The Hike Case Holds Firm Sterling’s support comes from home. September inflation rose to 3.5%, and core inflation, which leaves out food, energy, alcohol and tobacco, rose to 2.8%. As a result, LSEG data show traders treating a quarter-point Bank of England hike to 4% on November 5 as almost certain. UK rate expectations are rising while US expectations are being trimmed, and that gap is what GBP/USD is trading on.

US Dollar Index Technical Analysis: DXY Holds 101.50 as 101.85 Caps the Rebound Dollar Index Price Chart – Source: Tradingview The US Dollar Index is trading near 101.68 on the 4-hour chart. Since the rise to 102.94 in mid-October, each bounce has topped out lower. DXY now sits below the faster moving average near 101.85, a line that tracks the recent average price.

Resistance, where sellers tend to step in, starts at 101.85, followed by 102.00. Support, where buyers have stepped in before, is 101.50, followed by 101.30.

EUR/USD Forecast: October ECB Pause Expected Before Further Hikes MUFG expects the Euro to recover against the US Dollar next year, but its French fiscal scenarios underline the risks before the ECB's October meeting. The Euro-to-Dollar exchange rate slipped to $1.1215 on Thursday, down 0.17%, leaving it close to MUFG's end-2026 projection.

The bank retains its forecast of 1.12 for the final quarter of this year, followed by a gradual recovery to 1.18 by September 2027.

That would put the Euro roughly 5.2% above Thursday's level, calculated by Exchange Rates UK.

But MUFG's assessment of France is less reassuring than that medium-term path might suggest.

Its most likely French fiscal scenario places EUR/USD in a lower range, making budget delivery an important test of the recovery outlook ahead of the ECB's 29 October decision.

Image: EUR/USD 5-day chart France's budget problem extends beyond passing legislation MUFG assigns a 45% probability to continued fiscal drift as France approaches its presidential election.

In that scenario, MUFG envisages EUR/USD at 1.08-1.14, while the extra yield investors demand to hold French rather than German ten-year government debt widens to around 170 basis points.

These are conditional market outcomes, separate from the bank's retained quarterly forecasts, rather than a replacement September target.

MUFG's economists and strategists write: "The government may force through some measures, offering temporary relief, but the bigger question is whether upcoming elections can clear the path for sustained fiscal repair."

Their scenario describes how that risk could unfold:

"As the presidential election approaches, political incentives increasingly outweigh fiscal considerations. The government is forced to make concessions and relies on procedural mechanisms to advance key legislation, while some measures are diluted or delayed."

"The government survives, but implementation falls short of ambition and markets become increasingly sceptical. The deficit remains elevated at 5.6-6.0% of GDP."

French bond tensions were already limiting the Euro's ability to benefit from a weaker Dollar earlier this week, when Scotiabank highlighted weak momentum despite an improving weekly chart.

MUFG nevertheless judges contagion across Eurozone bond markets to be relatively contained so far.

Its concern is the damage that persistent French borrowing pressure could do to confidence and financial conditions, rather than an assumption that a wider crisis has already begun.

Higher bond yields complicate the ECB's inflation response Rising borrowing costs can restrain demand before the ECB raises its own policy rate, reducing the need for immediate tightening.

For the Euro, that can mean less support from expected interest rates even while French government yields climb.

MUFG says: "The bond sell off and French fiscal risks have taken an October rate hike off the table, with ECB officials starting to highlight the impact of tighter financial conditions on the outlook. Underlying inflation pressures also remain contained."

The bank still expects quarter-point increases in December and the first quarter of 2027.

MUFG says: "However, resilient activity and higher gas prices since September still support a degree of tightening into slightly restrictive territory, on a risk-management basis."

Eurostat's final September figures put annual inflation at 3.8%, up from 3.2% in August, with energy making the largest contribution.

Crédit Agricole separately expects an October pause, followed by a deposit rate of 2.75% in December and 3.00% in March 2027.

Louis Harreau, its head of developed markets macro and strategy, argues against accelerating the pace:

"Several ECB members have highlighted the need to be gradual in the monetary tightening. Besides, changing the pace of hikes (one per quarter since June) could convey a sense of urgency and trigger a market overreaction."

He also expects the ECB to avoid promising those subsequent increases, leaving investors to judge the outlook from incoming data and Christine Lagarde's comments.

France could make that press conference particularly sensitive.

Harreau says: "In our view, the key risk for the ECB is to trigger worries regarding the ECB's ability (or willingness) to step in."

"Currently, the ambiguity of a possible intervention is probably beneficial to limit extreme volatility on the market. If the ECB is too clear about the terms of its interventions or if, in contrast, it commits too explicitly about a potential intervention, it could trigger unwarranted market volatility."

What This Means for EUR/USD MUFG's 1.18 projection points to a recovery over several quarters, with little change envisaged before end-2026. An October pause would fit both banks' expectations and would not, by itself, overturn that outlook.

The more immediate risk is a loss of confidence in French fiscal delivery that keeps borrowing costs elevated and encourages investors to scale back expected ECB tightening.

On 29 October, reassurance about the bond market alongside a continued willingness to tackle inflation could help the Euro. A recovery will be harder to sustain if investors doubt either France's ability to deliver its budget or the ECB's capacity to contain the resulting financial strains.

Brown Brothers Harriman’s (BBH) Elias Haddad highlights that France’s deteriorating public finances are driving a sharp widening in French-German spreads, with the premium already near past crisis highs. Using Italy’s 2018 budget turmoil as a template, Haddad warns that further spread widening could pressure EUR/USD toward 1.1000, while noting that France’s 2027 presidential election may eventually restore confidence if credible deficit reduction is delivered.

French risks weigh on EUR/USD outlook "French 10-year bond yield premium over Germany is up over 100bps since late February to 175bps, closing in on its 2011 record high of around 190bps. The spread can widen to about 250bps if Italy’s 2018 budget crisis is any guide and drag EUR/USD down to 1.1000."

"France’s widening so far is just over half that size, leaving room for the spread to rise further."

"France’s weaker fiscal backdrop does not mean the crisis will follow Italy’s full course. Euro exit fears played a substantial role in the Italian debt market selloff, whereas those concerns remain muted today. The Sentix euro breakup index stood at 2.4% in September compared with around 13% during Italy’s 2018 crisis."

"In parallel, the ECB’s Transmission Protection Instrument (TPI) introduced in July 2022 reduces the risk of France’s fiscal troubles spilling over to other Eurozone economies. TPI allows the ECB to purchase sovereign bonds with no preset limit, subject to fiscal and debt sustainability checks."

"France’s 2027 presidential election could offer a similar turning point, but only if it produces a government able to deliver credible deficit reduction. Until then, French spreads remain vulnerable to further widening, keeping EUR/USD under pressure."

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

The EUR/USD pair trades in positive territory near 1.1245 during the early European trading hours on Thursday. Nonetheless, the potential upside might be limited amid fiscal concerns in France. European Central Bank (ECB) policymaker Fabio Panetta is scheduled to speak later on Thursday.

French 10-year borrowing costs climbed above 5% for the first time in 24 years on Wednesday as weekend unrest across France, fuelled in part by cuts to public services, has highlighted how politically difficult it will be to bring budget deficits under control.

"The euro cannot sell off—and it cannot rally," said Spectra Markets' president Brent Donnelly. "We are in a stalemate where the overhang of bad news just about perfectly offsets the market positioning,” Donnelly added.

The ECB is likely to leave its benchmark rate unchanged at 2.5% next week, though a hike is all but priced in before the year's end, according to Reuters.

Across the pond, traders see only a small chance of a Federal Reserve (Fed) rate hike next week, with the next interest rate increase expected in December, according to the CME FedWatch tool.

Euro range holds as EUR/USD shrugs off gas spike and bond jittersAnalysts at Societe Generale highlight that, for EUR/USD, it is “curious that cycle highs in nat gas prices and bond jitters have not triggered another leg down in a way that would have occurred prior to October.” They note that “the correlations have broken down over the past two weeks or so,” with the pair no longer reacting in its usual fashion to swings in energy prices and bond markets. According to the bank, this “would suggest that most of the bad news is priced in or investors are not committed to putting on new directional trades, playing the ranges instead.”

Warsh cautious on policy path even as investment surge and AI optimism support Dollar
Fed Chair Warsh delivered a moderately constructive but less forceful message, with the FXS Speechtracker score at 5.6 versus a 6.1 historical average, signaling a slightly softer tone relative to the established baseline. The admission of being “over-scarred from the Global Financial Crisis” underscores a risk-averse bias, even as Warsh highlights a structural growth and investment surge and refuses to pre-commit on October and December decisions, keeping policy optionality high. Emphasis on AI’s demand-side impact and the need to “crystalize” data on output, employment, and inflation points to a cautious, data-dependent stance that tempers immediate hawkish expectations for the Dollar.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated 127.51, confirming that the overall policy tone remains firmly in hawkish territory despite the slightly softer FXS Speechtracker score. The combination of a high FXS Fed Sentiment Index level and Warsh’s reluctance to pre-judge meetings suggests that markets should continue to price a restrictive bias, but without fresh hawkish escalation for the Dollar in the near term.

Technical Analysis: EUR/USD retains a negative tone in the near termIn the daily chart, EUR/USD holds below the 100-day Moving Average and also marginally under the 20-day Bollinger simple moving average, keeping the near-term bias bearish despite a mild stabilization. The Relative Strength Index (14) around 42 stays below the neutral 50 line, which suggests that downside momentum is easing rather than reversing, leaving the pair capped by overhead moving-average resistance.

On the topside, immediate resistance level is located at the October 6 high of 1.1276, en route to the upper boundary of Bollinger band at 1.1372. A more significant barrier is located at the 100-day Moving Average around 1.1455, which would need to be reclaimed to ease the broader bearish pressure. 

On the downside, initial support level is seen near at the October 19 low of 1.1185, followed by the lower limit of Bollinger band at 1.1120. The key contention level to watch is the 1.1000 psychological level. 

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

Euro FAQs

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Fears of a repeat of the European debt crisis are exaggerated. The dollar is unable to capitalise on its old trump cards. Neither rising oil prices nor the stabilisation of Treasury bond yields nor the rebound in stock indices is helping the US dollar. Investors increasingly view the risks of a repeat of the 2012 European debt crisis and the 2022 energy crisis as exaggerated. If so, the sell-off in EURUSD has gone too far. The bulls now have a chance to stage a comeback.

Rumours that Qatar and Pakistan have put forward a new proposal to resume talks between the US and Iran have led to increased volatility but have had little impact on Brent prices. European gas, however, reacted with a sharp fall. At present, there is no question of an energy crisis, as prices are still far from the 2022 peaks, despite storage facilities in Europe being only 75% full – a record low for this time of year.

Franklin Templeton Fixed Income argues that France, with its €3 trillion economy and €3.6 trillion in debt – ten times Greece’s during its crisis in 2011–2012 – poses a far greater threat to the eurozone than the PIGS did 14 years ago. On the other hand, France’s share of global GDP is less than 3%, half of what it was in 1980. Despite France’s debt burden rising to 119% of GDP, the currency bloc’s overall debt burden has fallen since the Greek crisis, now standing at a manageable 89%.

According to BlackRock, the region is far better prepared for financial stress than it was back then. Banks are stronger, and the ECB has vast experience and the tools to stabilise markets. Yet it was precisely the banking system that contributed to the European debt crisis in 2011–2012, as credit institutions were burdened by the debt of the eurozone’s peripheral countries. At present, banks’ share prices – with the exception of French banks – are showing no sign of falling.

If there is no repeat of the European crisis of 14 years ago, the sell-off in EURUSD has gone too far. The euro is gaining momentum for a rebound, supported by a pause in the Fed’s rate rises until December. Furthermore, there is a high chance that the Democrats will gain control of Congress following the midterm elections and will then throw a spanner in the works of Donald Trump’s inflationary policies.

The FxPro Analyst Team

FxProhttp://www.fxpro.co.uk/?ib=606792

FxPro is an award-winning online broker offering Contracts for Difference (CFDs) on forex, futures, spot indices, shares, spot metals and spot energies. FxPro serves clients in over 150 countries worldwide and offers multilingual customer support 24/5. Trading CFDs involves significant risk of loss.

Antje Praefcke at Commerzbank highlights that political and rating risks in France, plus cautious European Central Bank (ECB) expectations, weigh on the Euro (EUR) but are largely priced in. Markets now see an ECB hike in December and more tightening next year, which may be revised lower. She anticipates relatively stable EUR/USD into next week, with downside risk if French protests escalate and curfews prove ineffective.

France and ECB shape Euro outlook"The situation in France is an underlying factor weighing on the euro. More protests are expected this weekend. Moody’s could also be the last rating agency to downgrade France on Friday. And the ECB is unlikely to deliver a hawkish surprise next week. The market is no longer pricing in a rate hike for October, but is pricing in one for December and slightly more than one additional hike by the middle of next year. Here, too, the market may have to adjust its expectations should the ECB sound cautious regarding the future interest rate path, which would put the euro under downward pressure."

"In general, however, I think a great deal of negative news is already priced into the euro, particularly with regard to France; at the same time, the euro zone purchasing managers’ indices are likely to remain stable on Friday, so based on the current news landscape, I expect little new downward pressure on the euro. On the other hand, of course, a resolution to France’s debt problem or a credible budget proposal is unlikely, so there is also no reason to bet heavily on a recovery of the euro."

"At least for the coming days leading up to the central bank meetings in the middle of next week, I expect relatively stable EUR/USD rates, as there are no compelling reasons to favor one currency over the other. After all, everyone has their own cross to bear. Nevertheless, I see a slightly higher risk that the euro could see a short dip again if protests in France escalate, especially if the curfews imposed fail to have the desired effect."

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

Key Points:UK CPI rose 3.5% in September, above the 3.4% forecast, backing a November BoE hike. AI-trade doubts weighed on the dollar despite 94% odds of a Fed hike by December.DXY trades near 101.81 with a neutral bias between 101.58 and 102.01 as it tests trendline resistance. A close above 102.01 could expose 102.26 and 102.45, while a drop below 101.58 would favor sellers.EUR/USD trades near 1.1220 with a slight bearish lean below 1.1241 as the French-German yield spread widens to 153 basis points. A close below 1.1204 could expose 1.1172 and 1.1148.GBP/USD trades near 1.3371 with a slight bullish lean above 1.3353 and its rising trendline. A sustained close above 1.3404 could open 1.3454 and 1.3492, while a drop below 1.3302 would open 1.3239.Dollar Slips on AI Doubts as UK Inflation Jump Firms Hike Bets The dollar is losing some support from US tech stocks. The euro remains tied to France’s political crisis, and a hotter UK inflation print has strengthened sterling’s rate story.

Dollar Index: AI Jitters Outweigh Fed Hawkishness The dollar slipped on Tuesday as doubts about the AI trade resurfaced, Reuters reported. Traders are questioning whether companies can earn enough to justify heavy debt issuance tied to the build-out. Rate expectations are largely unchanged: CME’s FedWatch shows an 83% chance the Fed holds on October 28 and a 94% chance of at least one hike by December. With the Fed meeting on October 28 and the ECB the next day, positioning is likely to stay light this week.

Euro: The French Premium Keeps Widening The euro rose modestly, but traders remain wary as France faces widespread protests and a deteriorating fiscal outlook. Curfews in riot-hit areas brought some calm, but more demonstrations are planned for the weekend. The gap between French and German 10-year yields has widened to 153 basis points, close to levels last seen during the 2011-2012 debt crisis. A poll taken before the riots already showed Marine Le Pen leading the first round of next year’s presidential election. Handelsbanken’s Tommy von Brömsen said more euro weakness is likely to be priced in.

Pound: Inflation Surprise Backs a November Hike UK consumer prices rose 3.5% in the 12 months to September, above the 3.4% economists expected and up from 3.1% in August, the ONS said this morning. Motor fuel inflation hit its highest since August 2022, reflecting Britain’s exposure to energy shocks as a net importer. Coming a day after unemployment unexpectedly fell to 4.7%, the data strengthen the case for a Bank of England hike at its November 5 meeting, with the Autumn Budget due on October 28.

US Dollar Index Technical Analysis: DXY Holds 101.73 as Trendline Resistance Is Tested

Dollar Index Price Chart – Source: Tradingview The US Dollar Index is trading near 101.81 on the 1-hour chart. What stands out to me is that DXY is pressing right against the descending trendline that has capped every rally since the 102.94 spike. Sellers still have the broader edge, with a clear run of lower highs. However, buyers have defended the 101.50 to 101.58 support zone twice since last Friday, and price is now sitting on the faster-moving average.

The first resistance I am watching is the trendline, followed by 102.01. A clean break above that area would expose 102.26 and then 102.45. On the downside, 101.73 is the first support, with 101.58 below it. A break of that zone would open the way toward 101.32 and 101.03.

RSI is around 53 and rising above its signal line near 47, suggesting short-term momentum is improving. I am neutral while DXY trades between 101.58 and 102.01. A close above 102.01 would confirm a trendline breakout, while a drop below 101.58 would put sellers back in control.

GBP/USD Technical Analysis: Pound Holds 1.3353 as 1.3404 Breakout Test Continues

GBP/USD Price Chart – Source: Tradingview GBP/USD is trading near 1.3371 on the 1-hour chart. The steady recovery from the 1.3140 low, supported by a rising trendline, stands out. The pair cleanly bounced from that line during the retest of 1.3302 earlier this week. Price has now pushed into the 1.3353 to 1.3404 resistance zone, which capped the pound in late September. Both moving averages remain below price and are sloping higher.

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 The first resistance I am watching is 1.3404, where the latest spike was rejected. A clean break above it would expose 1.3454 and then 1.3492. On the downside, the rising trendline near 1.3365 and 1.3353 form the first support, followed by 1.3302 and 1.3239.

RSI is around 58 and has slipped just below its signal line near 62. That suggests bullish momentum is cooling at resistance but hasn’t reversed. I am leaning slightly bullish as long as GBP/USD holds above 1.3353. A sustained close above 1.3404 would strengthen the breakout case, while a drop below 1.3353 and the rising trendline near 1.3365 would be an early warning. A break below 1.3302 would open 1.3239.

EUR/USD Technical Analysis: Euro Rejected Below 1.1241 as 1.1204 Comes Into Focus

EUR/USD Price Chart – Source: Tradingview EUR/USD is trading near 1.1220 on the 1-hour chart. What stands out is yet another rejection from the descending trendline and the 1.1241-1.1270 resistance zone. That area has turned buyers away repeatedly since early October. The pair is now slipping below both moving averages. I’d watch for a dip toward 1.1204; a weak bounce from there would keep the bearish case intact, and a break below it would point to 1.1172.

The first support I am watching is 1.1204. A clean break below it would expose 1.1172, then 1.1148, and finally the 1.1113 low. On the upside, 1.1241 and the trendline remain the first hurdle, with 1.1270 as the key ceiling above.

RSI is near 43 and below its signal line around 51, suggesting momentum has turned negative without being oversold. I am leaning slightly bearish as long as EUR/USD stays below 1.1241. A close below 1.1204 would strengthen the downside case, while a sustained break above 1.1270 would invalidate it.

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 EUR/USD pair trades on a softer note near 1.1225 during the early European trading hours on Wednesday. French turmoil and fiscal concerns weigh on the Euro (EUR) against the US Dollar (USD). Traders await the speeches from European Central Bank (ECB) policymakers later in the day, including President Christine Lagarde, Philip Lane, Joachim Nagel and Piero Cipollone.

France will reinforce police with troops and mount a huge security operation for more protests planned on Saturday as the government acknowledged failures in its response to last weekend's violence, per Reuters. French Prime Minister Sébastien Lecornu also said there would be fresh curfews “where the situation requires it.”

"The worries in France are not going away anytime soon," said Tommy von Brömsen, FX strategist at Handelsbanken. "The bearish view on France will stay for a while longer, and there's much more euro weakness to be priced in,” Tommy added.

Last week, the Federal Reserve (Fed) Chair gave no preview about whether he feels more interest rate hikes will be needed or when.

"I don't prejudge meetings," said Warsh during the IMF annual meeting in Bangkok. "I don't believe in saying now what I might do at the meetings that we have in the balance of this year,” he added.

Euro seen consolidating as UOB keeps EUR/USD in defined rangeStrategists at UOB Group maintain that EUR/USD remains in a sideways pattern over the near term. Referring back to their latest update from last Friday, when spot was at 1.1215, they reiterate that the Euro “has likely entered a range-trading phase, and for the time being, it is likely to trade between 1.1160 and 1.1280.” UOB continues to “hold the same view for now,” underscoring a preference for consolidation rather than a directional call at this stage.

Warsh flags investment surge and AI focus but avoids pre-committing on policyFed Chair Warsh delivered a moderately constructive but cautious message, with the FXS Speechtracker score at 5.6/10, slightly softer relative to the historical average of 6.1/10 and consistent with a balanced tone. The admission of being "over-scarred from the global financial crisis" underscores a persistent bias toward risk management and financial stability, even as Warsh highlights structural growth and an investment surge driven by "good policies" and refuses to pre-judge upcoming FOMC decisions. The emphasis on AI as a near-term demand-side force and a tool to improve data confidence, alongside plans for an AI field hearing and new Fed task forces, points to a forward-looking stance that could eventually reshape expectations for the Dollar if productivity and inflation dynamics shift.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated level of 127.51, signaling that the speech left the perceived policy stance firmly in hawkish territory despite the non-committal language on future meetings. The combination of a flat FXS Fed Sentiment Index and a slightly lower FXS Speechtracker score suggests markets see no immediate shift in the Fed reaction function, with Warsh’s crisis-scarred caution and focus on financial stability risks reinforcing expectations for a vigilant, data-dependent path rather than a clear dovish pivot.

Technical Analysis: EUR/USD keeps a bearish vibe below key resistance levelsIn the daily chart, EUR/USD maintains a bearish near-term bias as spot remains capped beneath the 20-day Bollinger simple moving average and the 100-day simple moving average (SMA). Price is also holding below the upper Bollinger band, reinforcing the idea of a market contained within a broader downside structure. The Relative Strength Index (14) at 39.6 sits in bearish territory but above oversold thresholds, hinting at persistent selling pressure rather than exhaustion.

On the downside, the October 19 low of 1.1185 acts as an first support level for the cross, followed by the lower limit of Bollinger band at 1.1115. A clear break below this level would likely open the path for the 1.1000 psychological level and then the May 12, 2025 low of 1.0951. 

On the bright side, initial resistance level is located at the 20-day Bollinger SMA around 1.1252, en route to the upper boundary of Bollinger band near 1.1390. Any follow-through buying above the mentioned level could pave the way to the 100-day SMA at 1.1460. 

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

Euro FAQs

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

EUR/USD Forecast: Euro Rates Edge Higher as French Bond Risks Limit Recovery Scotiabank sees the Euro struggling to build momentum against the US Dollar as French bond tensions offset support from a weaker American currency. The Euro-to-Dollar exchange rate recovered to 1.1230 on Tuesday, up 0.15%, but remained below Friday's closing level.

Latest — Exchange Rates:

Euro to Dollar (EUR/USD): 1.122745 (+0.12%)

Pound to Dollar (GBP/USD): 1.337252 (+0.47%)

Dollar to Yen (USD/JPY): 158.20857 (-0.20%)

Scotiabank's assessment is neutral, with French borrowing concerns limiting the currency's ability to benefit from broader Dollar weakness.

Earlier, with EUR/USD at 1.1212, Scotiabank said: "The EUR is lagging its major currency peers on the day, weighed down by tensions in Eurozone government bond markets."

Scotiabank put the gap between French and German 10-year government bond yields near 150 basis points, equivalent to 1.5 percentage points, reflecting France's social and fiscal tensions.

That premium represents the extra yield investors demand to hold French debt rather than German bonds, making it a measure of concern about France's finances.

German improvement offers limited reassurance Germany's October ZEW survey showed a better assessment of current conditions, at minus 35.9, alongside a fall in expectations to 28.1.

ZEW president Achim Wambach said: "The German economy is slowly emerging from stagnation, but the recovery is not self-sustaining."

The institute identified high energy prices as a restraint on household spending and investment, through pressure on purchasing power and production costs.

Scotiabank also cautioned against treating the survey as a direct measure of economic activity: "The survey of financial professionals tends to be heavily weighted by market, rather than economic, developments but generally indicates the economy remains in "slow recovery" mode."

EUR/USD recovery needs stronger momentum Last week's rebound from support in the low 1.11s had raised hopes that an oversold Euro could stabilise.

Scotiabank now sees that opportunity struggling to develop:

"Sentiment and momentum are soft, preventing the EUR from taking advantage of the generally weaker USD tone and leveraging the bullish impulse that developed on the weekly chart last week-at least for now."

Scotiabank's support and resistance levels apply to intraday trading, rather than quarter-end forecasts.

"Intraday support is 1.1175/80. Resistance is 1.1275", Scotiabank says.

EUR/USD Exchange Rate FAQ Is Scotiabank bullish on EUR/USD?

Its latest short-term assessment is neutral, with weak momentum preventing last week's bullish signal from developing further.

Which EUR/USD levels is Scotiabank watching?

The bank identifies intraday support at 1.1175-1.1180 and resistance at 1.1275.

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

Commerzbank’s Thu Lan Nguyen analyzes EUR/USD’s sharp decline since September, initially driven by broad US Dollar strength and later by Euro-specific concerns over France’s public finances. She argues that as long as German Bunds retain their safe-haven role, Euro downside should be limited, and projects EUR/USD recovering next year, with forecasts rising from 1.15 in December 2026 to 1.18 by December 2027.

Euro pressured but downside constrained"EUR/USD has declined markedly since September. Initially, the move was driven by broad-based US dollar strength amid a more supportive interest rate outlook. Since early October, however, euro weakness has taken center stage, reflecting growing concerns over the sustainability of France’s public finances."

"That said, as long as German government bonds retain their safe-haven appeal, the euro’s downside should remain limited. With energy markets expected to ease and interest rate expectations to readjust, we see scope for EUR/USD to recover next year."

"EUR/USD fell to its lowest level since spring 2025 in mid-October. The downward move, which began in September, can be divided into two phases."

"We expect the US dollar to suffer more from such a correction than the euro, not least because lower energy prices should improve the economic outlook for the euro area by more than for the US. We therefore see further upside potential for EUR/USD next year."

"If, however, conditions in bond markets stabilize, we see scope for the single currency to recover in the short term. This is supported by the fact that, if necessary, the ECB has effective crisis-management tools at its disposal, such as the Transmission Protection Instrument (TPI)."

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

EUR/USD stays constructive on Tuesday after recovering from Monday’s gap-lower opening and dip below 1.12 handle, reinforced by 10DMA, but so far lacks strength for fresh attack at falling 20DMA (1.1257) which capped Friday’s rally.

Technical picture remains predominantly bearish on daily chart as 14-d momentum holds in the negative territory since Sep 9 and MAs remain in bearish configuration (55/100 DMAs are about to form a bear cross.

This suggests that the downside remains at increased risk, with limited correction from 1.1112 (Oct 14 low, the lowest since early Apr 2025), where 200 WMA contained larger downtrend, likely to precede fresh push lower.

On the other hand, political developments in Europe, particularly in France, became Euro’s dominant driver and initial direction signals are likely to come from that side.

The single currency showed limited positive impact from (currently) calmer situation in France, as the latest economic data from the EU add pressure on Euro.

Eurozone current account surplus contracted significantly in Aug (8.7B from 27.2B in July) and economic sentiment also weakened (Oct 18.5 vs Sep 25.8), with widening spread between French 10-y bonds against the major bloc’s economies, adding to negative signals.

Caution on loss of 1.1200 support that may risk renewed attack at 1.1130/20 supports (50% retracement of 1.0177/1.2082 uptrend / 200WMA) break of which to signal bearish continuation.

Conversely, lift above 20DMA would provide relief, but verification of bullish signal would require extension above 1.1320/40 zone (former low of Jun 24 / Fibo 38.2% of 1.1711/1.1112).

Res: 1.1235; 1.1257; 1.1311; 1.1340.
Sup: 1.1200; 1.1145; 1.1112; 1.1065.

The Euro (EUR) surrenders its early gains against the US Dollar (USD) and flattens at around 1.1213 during the European trading session on Tuesday. The major currency pair falls back as the US Dollar rebounds strongly due to a further increase in oil prices.

In European trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, rebounds to near 101.91 from its day’s low of 101.74. Still, the DXY is down 0.13%.

The WTI Oil price jumps 2.15% to near $100.20, the highest level seen in over a month. Ongoing conflicts in the Middle East, with Iran threatening to extend blockade to other sea routs, have increased risk premium for oil prices.

Higher oil prices de-anchor global inflation expectations, a scenario that increases the odds of interest rate hikes by central banks.

The US Dollar underperformed in the past week due to concerns over Artificial Intelligence (AI)-related optimism.

Analysts at MUFG highlight that US financial markets have been “a major beneficiary of strong foreign investor demand driven by AI-related optimism.” They note that foreign investors purchased “USD942 billion of US equities in the twelve months to July, while purchases of US corporate bonds increased sharply to USD452 billion over the same period.” MUFG argues that these “sizeable inflows highlight how the USD has become increasingly tied to investors’ search for higher returns in US financial markets, rather than benefiting from its traditional safe-haven status.” However, they caution that “this dynamic also leaves the USD more exposed to a reversal if sentiment towards AI deteriorates.”

Meanwhile, French fiscal turmoil spreading to other nations of the Eurozone has dampened the appeal of the Euro.

Analysts at Deutsche Bank highlight how the latest bout of French political turmoil has rippled across European markets, noting that “those market concerns around French debt cascaded across other countries and asset classes too.” They point out that “the Italian 10yr spread over bunds was also up +4.7bps on the day to 111bps, whilst Spain’s was up +1.2bps to 62bps.”

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1219, keeping a bearish near-term tone as it remains below the 20-period exponential moving average (EMA) at 1.1273. The pair’s inability to reclaim this short-term EMA suggests that rallies are being capped by overhead supply, while the Relative Strength Index (14) at 38.5 stays below the neutral 50 line, hinting at lingering downside pressure rather than a decisive recovery.

On the topside, immediate resistance is located at the 20-period EMA at 1.1273, which needs to be cleared to ease the current bearish bias and open the way for a more sustained rebound. Until that level is reclaimed, price action is likely to remain vulnerable to renewed selling on approaches to the EMA, with the lack of nearby technical supports on the chart reinforcing the risk of further slippage if sellers regain control.

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

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

The Euro (EUR) is up 0.15% at around 1.1230 against the US Dollar (USD) during the Asian trading session on Tuesday. The major currency pair gains as the US Dollar is under pressure ahead of Meta Q3 earnings on Wednesday.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.16% lower to near 101.80. The DXY has been under pressure for a week amid concerns regarding the continuation of Artificial Intelligence (AI) spending by United States (US) hyperscalers.

US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.68%-0.94%-0.25%-1.41%-0.33%-1.55%-1.23%EUR0.68%-0.23%0.44%-0.75%0.37%-0.85%-0.54%GBP0.94%0.23%0.70%-0.46%0.61%-0.62%-0.25%JPY0.25%-0.44%-0.70%-1.13%-0.00%-1.28%-0.85%CAD1.41%0.75%0.46%1.13%1.09%-0.18%0.22%AUD0.33%-0.37%-0.61%0.00%-1.09%-1.22%-0.86%NZD1.55%0.85%0.62%1.28%0.18%1.22%0.44%CHF1.23%0.54%0.25%0.85%-0.22%0.86%-0.44%
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 third quarter earnings report by Meta would reflect whether hyperscalers are stick to their investment agenda what they committed in previous quarters.

According to Goldman Sachs, Meta is one of five AI hyperscalers expected to increase combined capital expenditure to about $1.2 trillion next year, Reuters reported.

Meanwhile, the Euro is broadly under pressure due to continued tensions between Russia and Ukraine, and French fiscal risks.

Euro underperforms as French assets lag and geopolitical worries buildStrategists at Scotiabank highlight that the Euro is underperforming, pointing to “widespread and violent protests across France against poor conditions in schools and hospitals and broader concerns about affordability” as a key drag on sentiment. They add that French equities and fixed income have come under particular pressure, noting that “French stocks and bonds are underperforming and bond spreads versus Germany have widened to 145bps, sitting at the top of the (recent) historic range.”

Geopolitical risk is also feeding into the cautious tone. Scotiabank flags comments from President Zelenskyy, who said “the US is pushing Ukraine, not Russia to concede,” which the bank suggests is adding to broader geopolitical concerns around the Euro complex.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1232, keeping a bearish near-term tone as spot remains below the 20-period exponential moving average (EMA) at 1.1274. The pair’s inability to reclaim this EMA suggests that recent bounces are still capped by overhead supply, while the Relative Strength Index (14) at 40.28 recovers from oversold territory but stays below the midline, hinting at only modest improvement in downside momentum rather than a clear bullish shift.

On the topside, immediate resistance is located at the 20-period EMA at 1.1274, which acts as the first barrier that bulls would need to overcome to ease the current downside bias and open the way for a more sustained corrective phase. On the downside, the October 14 low at 1.1113 is the key support level.

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

Euro FAQs

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Prefer us on Google

Summary:

The EUR/USD pair is held in a tight range ahead of the upcoming statement by Christine Lagarde ahead of the ECB decision.
EUR/USD is stuck in a tight range today, with investors focusing on last week’s macro events,  the ongoing performance of the energy markets, and the ongoing protests in France. It is also wavering ahead of a relatively muted week in the economic calendar. It was trading at 1.2225, a few points above this week’s low of 1.1110.

France Protests and Christine Lagarde Statement
EUR/USD pair is attempting to rebound, even as fears of a debt crisis in Europe continue. These fears escalated during the weekend when protests in France turned deadly. The core issue among the protesters is the slashing of the education budget. 

The government slashed spending because of the ongoing surge in public debt that has pushed the ten-year yield to 4.88%. This is a high level since the figure bottomed out at 3.216% in March this year. Bond yields in other European countries like Germany and Italy have continued rising. 

The EUR/USD pair is also wavering as crude oil prices retreat. Brent, the global benchmark, dropped to $108 from last week’s high of $110. Still, there is a risk that the ongoing oil price retreat is temporary, as fundamentals favor more gains. Iran has continued shooting tankers attempting to cross the strait, while oil inventories have continued falling. 

There will be no major macro numbers from the United States this week. The only macro catalyst to watch this week will be a statement from Christine Lagarde, the head of the European Central Bank (ECB). Her statement will come ahead of next week’s interest rate decision, in which officials are expected to leave interest rates unchanged.

The key macro data to watch this week will be the German PPI and European consumer confidence report.

EUR/USD Technical Analysis

EUR/USD chart | Source: TradingView

The four-hour chart shows that the EUR/USD pair has rebounded in the past few days. It has risen from 1.1112 on October 14 to the current 1.1223. A closer look at has formed an inverted head-and-shoulders pattern, a popular bullish reversal sign. 

The pair has jumped above the 50-period Exponential Moving Average (EMA) and the Strong, Pivot, Reverse level of the Murrey Math Lines tool. Therefore, the pair will likely have a bullish breakout, potentially to the psychological level of 1.3000. A move above that level will point to more gains towards the Ultimate Resistance level of 1.1352. 

EUR/USD falls as troubles in France weigh
EUR/USD is falling on Monday amid concerns over higher energy prices and France's political stability. The pair continues to hold above the 1.11 level reached last Wednesday. However, the fundamental backdrop suggests that the path of least resistance remains to the downside.

Attention is on France's fiscal position as the government struggles to pass a deficit-reducing budget ahead of upcoming elections. The spread between French and German 10-year government bond yields has widened sharply, reflecting rising concerns over France's fiscal and political outlook. The spread has reportedly widened by around 40 basis points to 150 basis points, its highest level since the eurozone debt crisis in 2011. This is increasing risk premiums across the bloc and raising concerns over contagion. Combined with some of the worst riots seen in years, the political turmoil is also weighing on sentiment.

President Macron has declined Interior Minister Laurent Nuñez's offer to resign.

Elsewhere, natural gas prices have surged to their highest levels in four years as the Northern Hemisphere enters winter. Europe is particularly vulnerable given that gas storage levels are reportedly at their lowest on record. As a result, Europe could face another period of elevated gas prices, even if the war in Iran is resolved and winter proves mild. While the region is not facing an outright supply shortage, it lacks sufficient operational buffers, meaning any disruption could send prices higher. This would add to energy bills, which are already elevated, and put further pressure on inflation.

Meanwhile, the U.S. dollar presents a further headwind for the pair. The dollar fell last week, pulling back from an 18-month high as Treasury yields moved lower. Safe-haven flows away from technology stocks and into Treasuries helped push the 10-year yield below 5.1%. However, the USD is rising again today.

Federal Reserve Chair Kevin Warsh was unwilling to provide clear signals on the outlook for monetary policy, prompting markets to shift expectations for a potential rate hike towards December rather than October, despite hotter-than-expected U.S. inflation data last week.

Geopolitical risks stemming from tensions in the Middle East and the standoff over the Strait of Hormuz continue to support the safe-haven U.S. dollar.

Overall, the outlook remains bearish for EUR/USD. However, the lack of follow-through selling to take out last week's low warrants some caution.

Attention will remain on developments in France and PMI data later this week.

EUR/USD – forecast technical analysis

EUR/USD trades below its falling trend line and its 50 and 200 EMAs. The pair fell to an 18-month low of 1.1110 before recovering modestly, trading at 1.1215 at the time of writing. The recovery has helped the RSI move out of oversold territory.

On the downside, initial support sits around 1.1160. A break below this level would open the door to 1.1110, before attention turns to 1.1000, the psychological level.

On the upside, initial resistance sits at 1.1300, ahead of the 1.1350 resistance zone and the 50 EMA at 1.1390. A move above this area would help stabilise the outlook.

FTSE falls after strong weekly gains
The FTSE is falling on Monday, pulling back from a two-month high as markets across Europe come under pressure amid escalating protests in France, Belgium, Italy and Portugal.

The move lower follows gains of around 3% last week, when the FTSE enjoyed its strongest weekly rise in six months.

Banking stocks, defence contractors and miners are among the main fallers, overshadowing gains in energy shares.

The weakness in European equities comes as government bonds and stocks sell off across the region, with much of the pressure concentrated on French assets.

UK gilts are firmly in the red, with the 10-year yield up around 3 basis points. However, UK bonds are still outperforming some European peers, particularly French government bonds, as France continues to struggle with political turmoil.

Rising yields are weighing on UK banks. However, the sector may also be under pressure amid concerns that the Chancellor could raise taxes on banks in the Budget. Speaking at the IMF on Friday, Chancellor John Healey said: "I've got decisions to take in the Budget, and I'll set those out in two weeks' time." His comments have added to speculation over potential measures affecting the sector.

Miners initially moved higher, with the likes of Antofagasta and Glencore rising by more than 1%, but those gains were short-lived as copper prices fell. This came despite stronger-than-expected Chinese growth. The world's second-largest economy expanded by 4.5% year on year, beating expectations of 4.4% and accelerating from 4.3% in the previous quarter.

Energy majors are also providing some support to the index, with BP and Shell rising despite oil prices pulling back from their highest levels since mid-September.

This is a big week for UK economic data, with jobs figures on Tuesday, inflation data on Wednesday and retail sales on Friday. These releases come ahead of the Bank of England's interest rate decision in November, with markets pricing in a greater than 90% probability of a 25-basis-point rate hike.

FTSE forecast – technical analysis

The FTSE broke out of a symmetrical triangle pattern to the upside, reaching 10,900, a two-month high, before easing back to 10,780 at the time of writing. The price is retesting the falling trendline, which now acts as support.

Should support hold, buyers will look to push the index back above 10,900 to establish a higher high and bring 10,990 into focus, ahead of fresh record highs.

On the downside, a break below trend-line support at 10,770 would bring the price back into the triangle pattern and expose the 50 EMA at 10,680. A break below here would turn attention to 10,400, where the 200 EMA, rising trend-line support and horizontal support converge. A break below this level could see selling pressure gain traction.

The Dollar Index has fallen below 102 after the absence of a hawkish signal from Kevin Warsh’s speech on Friday and could extend its decline towards 101.25-101.00, while the Euro may rise towards 1.13 before the broader downtrend resumes. USDJPY could consolidate within 157-159, and EURJPY may decline towards 176 while below 178. EURINR remains bearish towards 105, below 107, though a near-term bounce towards 107 or higher is possible in the next couple of sessions. USDCNY has broken below 6.69 and could move towards 6.68. USDINR may trade within 94.75-95.20/30, with a break on either side determining the next move. The Pound looks bullish towards 1.35 while above 1.33, whereas the Aussie needs a decisive break above 0.70 to target 0.72/0.73.

The US Treasury Yields remain lower. There is some more room to dip further from here. Thereafter a fresh rise can happen to keep the broader uptrend intact. The German Yield have inched up. But the upside can be capped. A dip to test its support is likely to be seen first before the broader uptrend resumes. The 10Yr GoI is stuck inside a narrow range now. The bias is positive. Support is there to limit the downside. The yield has potential to rise more from here.

Dow remains capped below 52500, with scope to decline towards 51500. DAX can move towards 26000 while it holds above 25250. Nifty can extend towards 23500 while it holds above 22800. Nikkei remains vulnerable to a pullback towards 64000 or lower while below 65000. Shanghai needs to sustain above 3700 to move towards 3800, else it can fall towards 3600.

Brent and WTI crude prices have surged amid a weaker dollar and escalating Middle East tensions. The near-term outlook remains upward. Gold needs to hold above $4100 to target $4300-$4400, while silver remains vulnerable to a fall towards $52-$50 below $60. Copper could rise towards $6.70-$6.80 if support holds, while natural gas may trade within the $3.00-$3.50 range amid forecasts of mild US autumn temperatures.

Visit KSHITIJ official site to download the full analysis

Euro Technical Forecast: EUR/USD Weekly Trade Levels EUR/USD has fallen more than 5% from the August high, with the latest rebound snapping a five-week losing streak. The decline has reached a major technical support confluence, raising the prospect of a larger price inflection. Weekly momentum has deteriorated and although the broader bearish outlook remains intact, the bears may be vulnerable above critical support. Bulls face significant overhead resistance, with a stronger recovery needed to suggest a more meaningful low is in place. Eurozone and U.S. PMI data headline next week's event risk ahead of the Fed and ECB rate decisions later this month. Resistance 1.1276, 1.1355/65 (key), 1.1483- Support 1.1110/63 (key), ~1.1030s, 1.0905 EUR/USD enters the second half of October at a critical technical juncture after sustained selling pressure drove the pair to its lowest levels in 17 months. The latest recovery offers an initial sign of stabilization, but the broader downtrend remains firmly intact as buyers confront significant resistance overhead. With weekly momentum deeply stretched, the immediate focus is on whether Euro can build on this initial rebound or whether renewed selling pressure triggers another leg lower. Battle lines drawn on the EUR/USD weekly technical chart.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this EUR/USD setup and more. Join live on Monday’s at 8:30am EST.

Euro Price Chart – EUR/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Technical Outlook: In last month’s Euro Q4 Outlook we noted that EUR/USD was trading into a pivotal support into the close of Q3 and that, “From a trading standpoint,  rallies would need to be limited to 1.1578 IF price is heading for a break lower on this stretch with a close below 1.1355 needed to fuel the next major leg of the decline.” Euro broke below support the following week with price plunging more than 5.1% off the August highs. The decline has already extended into the next major support barrier with EUR/USD snapping a five-week losing streak on Friday.

The support zone in focus is 1.1110/63- a region defined by the 38.2% retracement of the broader 2022 advance, the 2024 high-week close (HWC), and the 2025 May low-week close (LWC). Weekly RSI has now fallen to the lowest levels since January of 2025 and while the momentum profile continues to favor the bears, the downtrend remains vulnerable while above this key threshold.   

Initial resistance is eyed at the 2023 swing high at 1.1276 and is backed by bearish invalidation at the 38.2% retracement of the 2025 advance and the April 2025 high week close at 1.1355/65. A breach / weekly close above this key pivot zone is needed to suggest a more significant low is in place and a larger reversal in underway. Subsequent resistance objectives are eyed at the median line of the yearly downtrend (currently near ~1.1430s) and the 61.8% retracement of the August decline at 1.1483.

A break below last week’s low would keep the focus on the lower parallel of the yearly downtrend which converges on the 25% parallel of the broader 2025 uptrend near ~1.1030s. Look for a larger reaction there IF reached with a break / weekly close below likely to trigger another accelerated decline. Subsequent support objectives rest with the 61.8% retracement at 1.0905.

           

Bottom Line: EUR/USD responded to a major support zone last week and while the broader outlook remains weighted to the downside, the decline may be vulnerable while above this level. From a trading standpoint, rallies would need to be limited to 1.1355/65 IF price is heading lower on this stretch with a close below 1.1110 needed to fuel the next leg of the decline.

EUR/USD event risk is concentrated at the end of next week, with euro-area flash consumer confidence due Thursday and preliminary October PMIs on Friday. The PMI release will be the key test of whether the recent improvement in euro-area activity is holding into the fourth quarter and could directly shape expectations ahead of the ECB’s October 29 meeting. On the U.S. side, September housing data and the October flash PMIs are also due, while Fed officials remain in their blackout period ahead of the October 27–28 decision. The result is a data-heavy Friday where any divergence between European and U.S. activity could produce a sharp move in EUR/USD. Stay nimble into the releases watch the weekly close for directional guide. I’ll publish an updated Euro Short-term Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

Key EUR/USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts Swiss Franc (USD/CHF) Gold (XAU/USD) US Dollar Index (DXY) Canadian Dollar (USD/CAD) Australian Dollar (AUD/USD) S&P 500, Nasdaq, Dow Japanese Yen (USD/JPY) Bitcoin (BTC/USD) British Pound (GBP/USD) --- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

US Dollar Talking Points: It was a big week for US data and, initially, stronger-than-expected inflation led to a sizable ramp in the Greenback. But shortly after that CPI release prices began to pullback and that continued into the weekly close, allowing for the build of a bearish engulfing candlestick on the weekly chart. The 101.80 level continues to loom large in the DXY basket and, as usual, picking spots is important as USD-weakness showed well in GBP/USD while USD strength remains more attractive in USD/JPY and perhaps even USD/CAD. All are setups looked at in the Tuesday webinar and updated below. When the fundamental backdrop diverges from price action, we have a possible turn, and that’s what the past week has been for the US Dollar. While inflation remains high in the US and the Fed is on track to hike rates again by the end of the year, the US Dollar sold off and put in a bearish engulfing candlestick on the weekly chart even despite strong CPI and PPI prints.

To be sure, there’s more to it as the Dollar came into the week overbought and showing signs of exhaustion, fueled by a stringent sell-off in the Euro. But, as we go into the next week the shadow of that bearish engulf remains prominent.

For levels, it’s the 101.80 level that stands out as support as the long-term Fibonacci level had previously held resistance back in June; and for the past two weeks that price has kept bears at bay.

US Dollar Weekly Price Chart Chart prepared by James Stanley; data derived from Tradingview

EUR/USD The big push point for the USD rally of late has been the continued sell-off in the Euro, with EUR/USD going oversold as DXY went overbought. And while the engulfing pattern of the above setup wasn’t quite mirrored in EUR/USD, there was a glimmer of hope that had started to show as the pair put in its first green week since the September open.

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

EUR/USD Daily The Euro is 57.6% of the DXY basket so there’s probably some intertwined fates between the two markets at this point, and while bulls did pullback in late-week trade which takes some of the shine off of the move, there is a case for capitulation, as looked at in the Tuesday webinar. The extended underside wick from the Wednesday candle led to a rally and fresh short-term higher-high, and this highlights the 1.1200 level as key support into early trade next week. And overhead, it’s the zone from 1.1275-1.1285 that looms large.

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

GBP/USD For USD-weakness, I still prefer GBP/USD and the weekly contrast below illustrates why. While EUR/USD printed an indecisive candle (albeit green) GBP/USD showed greater strength following two prior weeks of indecision.

And the low on Thursday printed at a huge spot – the 38.2% Fibonacci retracement of the 2025 rally, a level that had also caught support back in June.

The 23.6% retracement of that move is the next resistance level up, plotted at 1.3390 and, above that, I’m tracking a swing at 1.3451 and then the 1.3500 psychological level.

GBP/USD Weekly Price Chart Chart prepared by James Stanley; data derived from Tradingview

USD/JPY On the other hand, for USD-strength, I still prefer USD/JPY, which retains bullish structure on the daily chart even despite that bearish engulf in the DXY weekly.

This is a market that’s difficult to chase at fresh highs and we saw another example of bulls pulling back before a breakout as price re-approached the 159.00 level. The pullback, so far, has remained rather moderate as support hits can remain attractive especially given the still-positive carry on the long side of the pair.

For next week, I’m tracking supports at 157.50 and the 156.68-157.22 zone, and if we do see the USD sell-off deepen, the next look is for re-test of the familiar 155.00 zone.

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

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

The intermarket setup I’m watching includes:

EUR/USD holding above the psychological 1.11 support level, alongside a daily RSI rebound from oversold conditions last seen in 2015. The recovery remains restrained below 1.1260.

GBP/USD holding above the 1.3130 support and within the boundaries of a sideways consolidation that has been in place since November 2025.

The DXY pulling back from an 8-month resistance and the psychological 103 level after daily RSI reached overbought conditions last seen in 2023.

Together, these signals highlight key confirmation and invalidation levels for potential rebounds across the FX market. The outlook remains sensitive to inflation and energy prices, with US CPI rising to 3.7% in September and crude oil holding in neutral-to-bullish territory above $90.

DXY Outlook: Weekly Time Frame – Log Scale

Source: TradingView

After forming a bearish divergence alongside daily RSI overbought conditions last seen in 2023, the DXY pulled back from the 103 resistance level and resistance connecting higher highs since March 2026. This may confirm potential bullish rebound setups in EUR/USD and GBP/USD.

For the DXY, the key confirmation zone for a sustainable bearish reversal is around 101–100.80. This area aligns with the rising support connecting higher lows from January to August 2026. A break below this support zone would strengthen the case for a neutral-to-bullish outlook across the currency pairs.

For now, the outlook remains neutral, given the risks from crude oil, geopolitics and inflation.

On the upside, a move back above 102.60 and 103 would reassert the bullish bias, with 103.50 and 105 as the next potential levels.

Dollar Pairs in Perspective: USD/CHF, USD/CAD, USD/JPY and DXY

Source: TradingView

Several short-term reversal setups across the major dollar pairs may help put the DXY’s pullback into perspective:

USD/CHF: Price is pulling back from the 2023–2026 support-turned-resistance zone, which also aligns with the target of an inverse head-and-shoulders pattern on the weekly chart, near 0.84.

USD/CAD: The pair has consolidated after briefly stretching above its yearly highs below 1.43. A break above the psychological 1.43 level would discard the bearish reversal setup.

USD/JPY: The pair is consolidating below 159, raising the risk of a double-top reversal on the four-hour chart.

The respective invalidation levels for these bearish reversal setups are 0.84 for USD/CHF, 1.43 for USD/CAD and 159 for USD/JPY. For the DXY, the key invalidation level is 103.

EUR/USD Outlook: Weekly Time Frame – Log Scale

Source: TradingView

EUR/USD is struggling to recover above the descending trendline near 1.1260, drawn across the lower lows from July 2025 to September 2026. Weekly RSI is rebounding from oversold conditions last seen in 2025, while daily RSI is recovering from oversold conditions last seen in 2015. These signals are lifting the potential for a sustainable bullish reversal, but price confirmation is still needed.

A break back above 1.1260 would bring the 1.1380–1.1400 zone into focus as the next key resistance. Clearing that area would strengthen the case for a move toward the August highs and help sustain the broadening formation that has been developing since July 2025.

On the downside, a break below 1.11—the 50% retracement of the 2022–2026 advance—would expose 1.09. This level represents the 61.8% retracement and aligns with multi-decade resistance-turned-support, making it a potential area to watch for a rebound.

GBP/USD Outlook: Weekly Time Frame – Log Scale

Source: TradingView

GBP/USD is also showing a neutral-to-bullish setup, with both price action and RSI holding within the boundaries of a sideways consolidation that has been in place since November 2025.

Key support is near 1.3130, aligning with the 78.6% extension of the June 2025–November 2025–January 2026 cycle. A break below this level would expose 1.29 as the next potential support. It would also mark a bearish break below the nearly year-long consolidation, strengthening the pair’s longer-term bearish bias.

As long as GBP/USD holds above 1.3130 and within the consolidation, the neutral-to-bullish outlook remains intact across the charts. The midpoint of the range, around 1.3400–1.3480, is the next potential resistance zone, followed by the upper boundary near 1.36.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann highlight that EUR/USD has rebounded strongly from 1.1112 to close at 1.1218, more than reversing the prior day’s losses. Short-term momentum looks overextended, with the pair expected to trade between 1.1180 and 1.1240 intraday. On a 1–3 week view, EUR is now seen in a broader 1.1160–1.1280 range after breaking 1.1220 resistance.

Euro-Dollar shifts into consolidation band"24-HOUR VIEW: EUR plunged two days ago and then rebounded strongly to close at 1.1156 (-0.38%). When EUR was at 1.1180 in the early Asian session yesterday, we indicated that “the recovery has scope to extend but any advance should stay within a 1.1155/1.1205 range.” We were incorrect, as EUR rose to 1.1240 before easing slightly to close 0.56% higher at 1.1218. The sharp advance appears to be overextended. This, combined with early signs of slowing momentum, suggests EUR is unlikely to rise much further. Today, we expect EUR to trade in a range between 1.1180 and 1.1240."

"1-3 WEEKS VIEW: We have been holding a negative EUR view for more than a month. After EUR dropped to 1.1112 and rebounded strongly, we highlighted the following yesterday (15 Oct, spot at 1.1180): “Further EUR weakness is not ruled out, but the decline from last month appears to be overextended, both time-wise and price-wise. However, only a breach of 1.1220 ( ‘strong resistance’ level) would mean that EUR is not declining further.” EUR subsequently rose and broke above 1.1220 with a high of 1.1240. EUR has likely entered a range-trading phase, and for the time being, it is likely to trade between 1.1160 and 1.1280."

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

U.S. Dollar Pulls Back Amid Falling Treasury Yields

DXY 151026 4h Chart U.S. Dollar Index is losing ground despite strong Retail Sales data and higher-than-expected PPI report.

Retail Sales increased by +0.8% month-over-month in September, compared to analyst forecast of +0.3%.

PPI increased by +1.3% month-over-month in September, while analysts expected that it would grow by +0.5%.

Traders also had a chance to take a look at the Initial Jobless Claims report. The report showed that 199,000 Americans filed for unemployment benefits in a week, mostly in line with the analyst forecast of 200,000.

The strong pullback in Treasury yields served as a negative catalyst for the American currency. Treasury yields moved lower as traders rushed to buy bonds amid sell-off in AI stocks.

In case U.S. Dollar Index settles below the 101.90 level, it will head towards the nearest support, which is located in the 101.50 – 101.65 range. On the upside, a successful test of the resistance at 102.35 – 102.50 will open the way to the test of the next resistance level at 103.15 – 103.30.

EUR/USD Rebounds From Yearly Lows

EUR/USD 151026 4h Chart EUR/USD moved higher as traders focused on developments in bond markets and ignored the weak Euro Area Industrial Production report. The report indicated that Euro Area Industrial Production decreased by -0.5% month-over-month in August, compared to analyst forecast of +0%.

If EUR/USD stays above the 50 MA at 1.1200, it will head towards the resistance level at 1.1250 – 1.1265. On the support side, a move below the 1.1175 level will push EUR/USD towards the support at 1.1075 – 1.1090.

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

GBP/USD Moves Higher As UK GDP Exceeds Estimates

GBP/USD 151026 4h Chart GBP/USD gained ground as traders focused on the better-than-expected UK GDP report. The report showed that UK GDP increased by +0.1% month-over-month in August, compared to analyst forecast of -0.1%.

The nearest resistance level for GBP/USD is located in the 1.3285 – 1.3300 range. In case GBP/USD climbs above the 1.3300 level, it will head towards the next resistance, which is located in the 1.3385 – 1.3400 range.

USD/CAD 151026 4h Chart USD/CAD pulled back as traders focused on the strong rebound in precious metals markets. Gold gained 1%, while silver was up by +2.4%.

Currently, USD/CAD is trying to settle below the 1.4200 level. In case this attempt is successful, USD/CAD will head towards the support level at 1.4135 – 1.4150. On the upside, a successful test of the resistance level at 1.4235 – 1.4250 will push USD/CAD towards the 1.4300 level. If USD/CAD climbs above 1.4300, it will head towards the next resistance at 1.4350 – 1.4365.

USD/JPY Remains Stuck Near Resistance At 158.00 – 158.50

USD/JPY 151026 4h Chart USD/JPY is mostly flat despite the strong pullback in Treasury yields. The yield of 2-year Treasuries declined towards the 4.75% level, while the yield of 10-year Treasuries settled below 5.10%.

The technical picture remains unchanged as USD/JPY is stuck near the resistance level at 158.00 – 158.50. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge. A move above the 158.50 level will open the way to the test of the resistance level at 160.00 – 160.50.

If you’d like to know more about how to trade forex, please visit our educational area.

Prefer us on Google

Summary:

EUR/USD fell over 2% to multi-month lows near 1.1155, a move spurred by French budget deficit anxieties and persistent US-Eurozone yield differentials. This euro decline reflects significant macroeconomic hurdles, including widening French bond spreads, high global energy import costs, and sluggish European growth. With debt close to 119% of GDP, a 5% deficit, and rising borrowing needs for 2027, a lasting risk premium has formed ahead of French elections. The euro has had a rough patch lately. Concerns over French debt, a strong dollar, and changing interest rate expectations have driven EUR/USD to its lowest point in over a year. After falling to a 17-month low near 1.116 in early October, the pair has mostly traded sideways in recent days.

The pair picked up notably two days ago and is still gaining ground during European trading today, hovering around the 1.12 level. This makes you wonder if the downward trend has finally run its course.

Was the 2% Monthly Loss Justified or Overdone? When a major currency pair drops 2% in a month, it’s more than just short-term noise, but signals a shift in core expectations. Looking at the economic factors, it seems the euro’s decline stemmed mainly from economic realities, not an overreaction.

Concerns about French debt have been a primary driver. The difference in yield between 10-year French and German bonds widened significantly, nearing 160 basis points at one point. This level hasn’t been seen since the eurozone sovereign debt crisis over a decade ago.

France’s public debt is close to 119% of its GDP, with a deficit around 5%. Forecasts show the country’s borrowing needs could hit a record €340 billion by 2027. Political uncertainty leading up to the 2027 presidential election has added to the pressure, with Jean-Luc Mélenchon, a key political figure, suggesting measures like the central bank cancelling the French debt it holds.

Crédit Agricole, for its part, warns that bond spreads might widen even more. Fears of contagion, which once loomed large in the Eurozone, have resurfaced, even though the European Central Bank can handle extreme market stress. UBS, however, thinks the euro’s selling pressure might have gone too far.

A strong U.S. economy and the dollar’s role as a safe haven have kept it well-supported. Record speculative bets against the euro have also piled on technical selling pressure.

But perhaps the market’s reaction has overshot, moving beyond what underlying fundamentals suggest. France, for instance, isn’t facing an immediate solvency crisis. Its interest payments remain manageable relative to its GDP, and the broader Eurozone economy appears stable.

Earlier this month, French bond yields dropped, and the euro gained some ground back. This suggested the sell-off stemmed partly from market sentiment, not an irreversible fundamental decline.

Could a Rebound Be In the Works? The euro’s recent sideways trading and modest gains hint that selling momentum may be fading. Support near 1.11-1.116 has held firm through several tests. Should French yields stay steady and U.S. economic data soften enough to ease dollar strength, the EUR/USD pair might push toward 1.13.

Even so, any recovery will likely remain fragile until France shows clearer progress on its 2027 budget or finds more political stability.

So, while the euro’s recent losses certainly stem from real fiscal and political challenges in France, the sheer size of the drop also reflects a substantial risk premium.

We might see some stabilization, but a lasting recovery truly depends on real improvements in France’s fiscal plans and a more balanced economic policy between the U.S. and Europe.

The upcoming U.S. inflation data will largely determine if U.S. Treasury yields hold above 5% or decline. That, in turn, will influence the broader U.S. Dollar Index.

Why has EUR/USD declined since early September?

The euro’s drop against the dollar mainly stems from worries over French debt pushed the France-Germany bond yield spread much wider. Meanwhile, the U.S. economy stayed strong, and money flowed into the dollar as a safe bet.

Is the euro’s more than 2% monthly loss fully justified?

Yes, partly, because France faces real fiscal risks. However, the market’s reaction also seems to bake in an exaggerated risk premium. That premium might ease up if bond yields settle down.

How significant are French fiscal challenges for the euro?

With debt around 119% of GDP, a 5% deficit, and more borrowing needed in 2027, France’s financial situation is quite serious. This has built in a persistent risk premium for the euro, especially with elections coming up.