EUR/USD holds near $1.154 as U.S. labor weakness fuels dollar slide

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Euro U.S. labor weakness

Highlights

- EUR/USD steadies near 1.1540 as U.S. layoffs jump 183% month over month.

- Fed rate-cut expectations rise while ECB signals confidence in policy stance.

- Technical support at 1.15–1.1525 remains key to preserving euro momentum.

At the same time, European Central Bank officials reiterated a steady policy outlook, offering the euro near-term stability amid mixed global sentiment.

Buyers defend critical support as dollar weakens

The daily chart shows EUR/USD consolidating within a clear descending channel from the September peak. Price remains below the 20-day and 50-day EMAs, currently near 1.1583 and 1.1625, confirming that sellers still dominate the medium-term trend. However, the pair is finding steady demand above the 0.382 Fibonacci retracement at 1.1525, which has served as a reliable demand shelf through the past week.

EUR/USD price analysis (Source: TradingView)

The 1.15–1.1525 zone now acts as a critical pivot. It aligns with both the channel’s lower boundary and the 38.2% retracement, reinforcing its technical importance. Consistent defense of this area indicates accumulation from buyers, but a decisive daily close below it would expose deeper liquidity between 1.14 and 1.142, the same zone where a sharp rebound took place in August.

Momentum indicators are showing tentative improvement. The Relative Strength Index has flattened near 41, suggesting that selling pressure is slowing. A bullish divergence is forming as price continues to make lower lows while RSI stabilizes. If RSI rises above 50, it would signal that bullish momentum is returning.

Macro divergence supports euro resilience

The broader macro backdrop is shifting in favor of the euro. Weakening U.S. employment data has fueled speculation that the Fed’s tightening cycle is over, pushing Treasury yields lower and eroding the dollar’s yield advantage. Meanwhile, ECB policymakers including Christine Lagarde have suggested that the current policy stance remains sufficiently restrictive, implying no urgent need for cuts. This divergence supports stabilization in EUR/USD even as overall risk appetite remains cautious.

If buyers can reclaim the 20-day EMA at 1.1583, the next resistance emerges at 1.1655, which aligns with the 0.618 Fibonacci level. A confirmed breakout above 1.1700 would shift the overall trend from corrective to bullish, targeting the July swing high near 1.1820.Conversely, a breakdown below 1.15 would negate the stabilization narrative, opening the door toward the deeper 1.14 support band. Until that occurs, the structure favors accumulation and range-building rather than fresh downside continuation.

Earlier analysis identified 1.15–1.1525 as the defining zone for the euro’s short-term outlook. That view remains unchanged. The pair’s ability to hold above this support despite dollar strength confirms that buying interest persists at lower levels. As long as EUR/USD trades above this base, a rebound toward 1.165–1.17 remains in play.

The next test for traders will be whether weak U.S. data continues to shift Fed expectations enough to extend dollar weakness. A sustained break above 1.158 would mark the first technical confirmation of renewed euro strength.

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