EUR/USD steadies near $1.1735 as U.S. shutdown weighs on dollar
The euro held modest gains against the U.S. dollar on Thursday, trading near 1.1735 as investors weighed the economic fallout of the ongoing government shutdown. The lapse in funding has suspended key data releases including weekly jobless claims and the September payrolls report, leaving the Federal Reserve without timely labor indicators ahead of its October meeting.
Highlights
- EUR/USD traded at 1.1735 on Thursday, supported by U.S. political gridlock and stable ECB policy.
- U.S. shutdown halted key data, reinforcing bets on a 25 bp Fed cut at the October policy meeting.
- Support sits at 1.1715–1.1730, with resistance at 1.1745; a break above 1.1790 opens path to 1.1850.
With this blackout complicating policy assessment, Fed funds futures fully price in a 25 basis-point cut later this month. Political friction added to the dollar’s pressure after the administration froze $26 billion in funding for Democratic-leaning states.
EUR/USD price dynamics (Source:TradingView)
Meanwhile, the Supreme Court’s confirmation that it will hear arguments on Fed Governor Lisa Cook’s removal in January temporarily eased concerns about central bank independence, though credibility risks linger.
ECB policy steadies the euro
By contrast, the European Central Bank has kept a balanced stance. President Christine Lagarde reiterated that inflation risks remain contained, giving little signal of further near-term easing. The relative divergence with the Federal Reserve’s expected policy shift has given the euro a degree of resilience, even as the single currency remains in a broader consolidation.
Technical indicators highlight that EUR/USD is holding above the 1.1715–1.1730 support cluster, reinforced by the 100-day EMA. Immediate resistance is layered at 1.1740–1.1745, aligned with the 20- and 50-day EMAs. A decisive close above 1.1790 would strengthen momentum toward 1.1850, while failure to hold 1.1715 could expose 1.1650. The RSI sits near 51, reflecting balanced momentum without signs of overextension.
Outlook
The near-term path for EUR/USD depends heavily on Washington’s fiscal standoff. A prolonged shutdown would not only weaken sentiment but also delay critical data needed by the Fed. If gridlock persists, the dollar is likely to remain under pressure, keeping the euro supported.
Previously, we discussed the euro’s ability to benefit from relative policy divergence, with the ECB signaling stability while U.S. risks undermined the dollar. That narrative remains intact, with the 1.1790 barrier serving as the pivot for confirming renewed upside momentum.
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