EUR/USD slips to $1.152 as dollar strength builds and euro struggles to find support

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EUR/USD slides toward 1.15

Highlights

- EUR/USD hovers near 1.1520 after five consecutive sessions of decline.

- Fed rate cut odds fall to 65%, bolstering dollar appeal amid political uncertainty.

- Technical outlook favors 1.1450–1.14 downside unless 1.16 resistance breaks.

The shift in sentiment follows a cautious tone from Fed Chair Jerome Powell, who reiterated that monetary policy remains “data dependent.” As a result, markets have reduced the implied probability of a rate cut in December to 65%, down from 94% a week ago, according to the CME FedWatch Tool. This adjustment has pushed the dollar higher, supported by elevated Treasury yields and safe-haven demand amid the ongoing U.S. government shutdown.

Dollar regains footing as euro sentiment weakens

The Federal Reserve’s latest messaging reinforced the dollar’s near-term advantage. Powell’s remarks signaled caution against premature policy easing, prompting investors to rotate toward the greenback while trimming risk exposure. The political stalemate in Washington has added another layer of uncertainty, but with Treasury yields holding near multi-month highs, the dollar remains well-supported.

EUR/USD price dynamics (Source: TradingView)

Across the Atlantic, the ECB’s decision to keep rates unchanged for a third consecutive meeting has provided little impetus for the euro. Policymakers including Francois Villeroy de Galhau and Martins Kazaks struck a balanced tone, noting that inflationary risks have receded while stressing the need to remain flexible if growth deteriorates. Without a clear policy shift, the eurozone outlook remains muted, leaving the currency vulnerable to external dynamics rather than domestic drivers.

Despite marginal improvement in eurozone manufacturing data and business sentiment surveys, the absence of fiscal support continues to cap optimism. Analysts note that while the region’s inflation is moderating, its structural growth remains too soft to warrant a sustained rebound in the euro.

Technical outlook: $1.145 in focus as downtrend persists

The EUR/USD pair remains confined within a descending channel on the daily chart, maintaining a series of lower highs since September. The pair is now trading below its key moving averages — the 20-day EMA at 1.1608, 50-day at 1.1582, and 100-day at 1.1639 — confirming sustained bearish momentum.

The immediate resistance lies near 1.1570–1.1600, where both the 20-day EMA and channel midpoint converge. A break above that area could trigger a brief corrective move toward 1.1680, though the broader bias remains negative. On the downside, 1.1450 and 1.1400 serve as the next support zones, aligning with the 200-day EMA at 1.1399 and a previous demand region from March.Technical indicators also point to continued selling pressure. The Parabolic SAR dots remain positioned above the price, while momentum oscillators show limited signs of recovery. A sustained close below 1.1450 could open the door to a deeper retracement toward 1.1380–1.1350.

Outlook: Dollar advantage holds as traders eye Fed guidance

The euro’s near-term path remains tied to U.S. data and political developments. Should upcoming economic reports — including nonfarm payrolls and inflation figures — show resilience, expectations for further rate cuts could weaken, keeping the dollar supported. Conversely, weaker readings might reignite dovish sentiment and offer the euro temporary relief.

For now, the technical and fundamental backdrop favors the dollar. Unless EUR/USD can reclaim 1.16, the bias remains firmly bearish with downside targets at 1.1450 and 1.14. A rebound from those levels could see a move toward 1.1650–1.17, but only a breakout above the descending channel would confirm a trend reversal.

The broader narrative suggests continued euro vulnerability as the Fed’s policy advantage and political uncertainty in the U.S. dominate near-term sentiment. Traders will look for signs of stabilization as the pair approaches key support levels, though the balance of risk remains tilted toward further weakness in the sessions ahead.

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