EUR/USD price holds near $1.1625 as ECB comments and trade optimism lift sentiment

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Euro ECB comments and sentiment

Highlights

- Euro steadies near 1.1625 as ECB signals no further tightening.

- German IFO data and U.S. inflation updates eyed for fresh cues.

- Technical structure shows resistance at 1.1680; support at 1.1580.

Euro buying received support after ECB policymaker José Luis Escrivá said the region’s interest rates are “appropriately set” given inflation at target levels. The remark helped ease market concerns over further tightening, reinforcing the view that the ECB will maintain its current policy stance through year-end.

Meanwhile, optimism surrounding U.S.–China trade discussions added another layer of support to risk assets. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng reported “substantial progress” on contentious topics such as export controls and shipping levies. Bessent further confirmed that President Trump’s threat of 100% tariffs was now “off the table,” signaling a de-escalation that may improve global trade sentiment.

While this narrative benefits risk-sensitive currencies like the euro, the potential for renewed dollar strength remains. A successful U.S.–China agreement could also reinforce the dollar’s position if investors view it as boosting American economic leverage.

Technical picture shows cautious recovery

Technically, EUR/USD is consolidating above the 0.236 Fibonacci retracement at 1.1628 — a level that has acted as a key pivot throughout October. The 20- and 50-period exponential moving averages (EMAs) at 1.1620 and 1.1645 frame the near-term battle zone for direction.

EUR/USD price dynamics (Source: TradingView)

A sustained close above the 50-EMA would open the path toward 1.1684, where the descending trendline and 0.382 Fibonacci retracement intersect. Further gains could target 1.1737, the 0.618 retracement and mid-October swing high. On the downside, support rests at 1.1620, followed by 1.1580 and October’s low at 1.1539 — a level viewed as the final line of defense for euro bulls.

Momentum indicators are mildly constructive, with the Relative Strength Index (RSI) hovering at 51, suggesting neutral-to-bullish bias without signs of exhaustion. If the euro fails to extend beyond 1.1650, however, profit-taking could send it back into the 1.1600–1.1580 consolidation range.

Politics and macro drivers define near-term risks

European political dynamics may complicate sentiment. France’s Socialist Party is reportedly preparing a no-confidence motion over proposed changes to the wealth tax, a move that could test government stability if it gains traction. Investors are also awaiting Germany’s IFO Business Survey, which will provide a clearer picture of eurozone economic health after months of weak manufacturing data.

In the U.S., attention turns to inflation data later this week. Forecasts point to a reading above 3% year-on-year, a result that could keep the Federal Reserve cautious about accelerating rate cuts. A hotter print would likely strengthen the dollar and pressure the euro, while softer inflation could extend the pair’s recovery.

Outlook: Euro eyes $1.168 resistance as data-heavy week unfolds

As previously discussed, EUR/USD’s short-term fate hinges on whether it can sustain momentum above 1.1645–1.1680 resistance. Clearing this zone would confirm a technical reversal and open room toward 1.1730. Failure to hold current levels, however, risks dragging the pair back toward 1.1580 and potentially 1.1539 if the dollar regains strength.

With major data releases, political risks, and a Trump–Xi meeting on the horizon, the euro remains delicately poised — caught between stabilizing European policy signals and a still-dominant dollar backdrop.

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