EUR/USD holds near $1.155 as dollar gains on shutdown deal and ECB signals steady policy
EUR/USD traded around 1.155 on Friday, steadying after three straight sessions of losses as renewed U.S. dollar strength weighed on the pair. Washington’s progress toward ending the government shutdown boosted confidence in the greenback, with markets viewing the bipartisan deal as a sign of reduced fiscal uncertainty. The euro’s immediate reaction has been defensive, though the broader policy backdrop still offers relative balance.
Highlights
- Euro steadies near $1.155 after three days of decline as U.S. shutdown resolution lifts dollar.
- ECB policymakers hold firm on restrictive policy while Fed faces softer economic data.
- Key levels: support at 1.1525–1.1550 and resistance near 1.162 and 1.17.
On the technical front, EUR/USD remains trapped within a descending channel that has defined price action since September. The pair’s recent failure to break above the upper boundary near the 50-day EMA reinforced the short-term bearish bias. Currently, the pair sits just above the 0.382 Fibonacci retracement at 1.153–1.155, a zone that has consistently attracted buyers. Both the 20-day and 50-day EMAs are trending downward, with the Parabolic SAR positioned above price, signaling that sellers still hold momentum.
EUR/USD price dynamics (Source: TradingView)
However, the euro’s downside has been cushioned by policy divergence. While the Federal Reserve faces weakening data — highlighted by the University of Michigan consumer sentiment falling to a three-and-a-half-year low — the European Central Bank maintains a more patient approach. ECB officials continue to warn that inflation progress is uneven and that rate cuts are premature, with market pricing now assigning less than a 50% chance of a rate reduction before September 2026.
Watching the Fibonacci cluster for breakout confirmation
The 1.158–1.162 region remains critical. This band overlaps with the 20-day EMA, the upper channel line, and the 0.50 Fibonacci retracement, making it a technical magnet. A daily close above this cluster would indicate a shift in sentiment and open room for a move toward 1.17, followed by the 1.182 July swing high.
If price fails to hold above 1.155, the next downside target lies near the 200-day EMA at 1.1405, marking the final layer of structural support before the broader bullish trend from April turns vulnerable.
Earlier discussions highlighted the 1.15–1.1525 region as the key demand shelf. The latest market action confirms its relevance as buyers continue to absorb pressure there. The pair remains in a short-term correction but not yet a full trend reversal. Holding above this base keeps a recovery toward 1.165–1.17 in play, while losing it would invite deeper losses toward 1.14.
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