The EUR/USD pair is facing increased selling pressure, currently trading near 1.1520, just above a three-month low of 1.1500, while the U.S. dollar remains steady around 99.78 in anticipation of the ISM Manufacturing PMI release. The euro is facing challenges in regaining momentum after experiencing a series of technical breakdowns at 1.1550 and 1.1530, further solidifying the bearish trend for the third week in a row. The EUR/USD started the session at 1.1558, fell to an intraday low of 1.1511, and still encounters resistance near 1.1560, reflecting weak recovery attempts amid persistent demand for the dollar. The strength of the U.S. dollar is shaped by Fed Chair Jerome Powell’s suggestion that the recent 25-basis-point rate cut could be the last one for 2025. The statement lowered market expectations for another cut in December from 90% to 71%, stabilizing Treasury yields and bolstering demand for the dollar. The 10-year U.S. Treasury yield stands at about 4.31%, with the short end remaining elevated at around 4.55%, limiting the potential for euro appreciation. Federal Reserve officials have highlighted that any return to monetary easing will hinge on the appearance of notable economic weakness, a stance that is limiting risk appetite across global foreign exchange markets.
The ongoing economic stagnation in the Eurozone continues to weigh heavily on sentiment. Manufacturing PMIs across the bloc persistently show figures under 50, signaling a contraction despite some minor stabilization. Germany’s factory PMI recorded at 49.6, Italy at 49.3, and France at 48.3, highlighting a difference in recovery pace. The political unrest in France and the Netherlands has notably eroded investor confidence, while ECB policymakers remain divided on the possibility of policy easing in early 2026. Dovish members argue that slowing growth might justify pre-emptive rate cuts; however, ongoing service inflation—staying above 3% year-on-year—continues to fuel the hawks’ firm resistance. The central bank’s medium-term projections show inflation levels of 1.7% for 2026 and 1.9% for 2027, highlighting the importance of a careful approach going forward. The EUR/USD is presently showing a downward trend, situated below its 50-day EMA at 1.1600 and the 200-day EMA at 1.1649, suggesting that any upward movements are encountering selling pressure. Momentum indicators show weakness: the Relative Strength Index is around 34, nearing oversold territory but not providing clear signs of a reversal. The 1.1500 level acts as an important support point; a daily close below this mark could indicate 1.1475, 1.1440, and possibly 1.1420 as the next downside targets.
The market structure shows that the pair is trapped within a descending channel that has been stable since mid-September. Sellers continue to exert control over price movements, marked by a pattern of declining highs and lows that define the current trend. The drop below 1.1550 seen last week triggered a rapid surge in bearish momentum, confirmed by increasing volume and a crossover in short-term moving averages. Unless EUR/USD recovers to 1.1610, the technical outlook is expected to remain pessimistic until mid-November. The ISM Manufacturing PMI in the U.S. is expected to be 49.4, a slight increase from the prior 49.1, while ISM Prices Paid is forecasted to climb to 62.4 from 61.9. These indicators could impact the dollar’s short-term path. A surprisingly strong PMI reading could support the Fed’s careful approach and increase the dollar’s strength, potentially pushing EUR/USD down to 1.1470. On the other hand, any unexpected negative developments could result in a short-term decline of the dollar, allowing for a recovery towards 1.1580. Market participants are paying close attention to upcoming FOMC speeches for insights into the Federal Reserve’s evaluation of economic data, especially given the rising uncertainty related to the U.S. government shutdown, which experts warn could decrease Q4 GDP by up to 0.3%.
From a macro-funding perspective, the current tight money-market conditions are beneficial for the dollar. The U.S. Treasury is diligently focused on rebuilding its cash reserves after the debt-ceiling standoff, which has absorbed global liquidity, causing short-term rates to rise and boosting demand for the dollar. Experts from various financial institutions note that restricted access to dollar funding could further weaken the euro, particularly if this issue extends to global markets, as European corporations face rising hedging costs. In Europe, the mood remains fragile as the region struggles with low productivity and weak domestic demand. The Eurozone Composite PMI stands at 50.2, suggesting a bit of stabilization; nonetheless, confidence is still diminishing amid ongoing fiscal discussions. ECB President Christine Lagarde recently acknowledged that growth risks are skewed towards the downside, while inflation in the service sector remains stubbornly high—a scenario that keeps policymakers in a “tight but cautious” position. The central bank’s reluctance to swiftly reduce rates keeps real yields in Europe positive; however, these yields lack the strength to attract considerable capital inflows compared to the U.S., where nominal yields remain high.
Intraday charts show that EUR/USD is moving between 1.1510 and 1.1535, with immediate resistance noted at 1.1560. The failure of the pair to hold above the 1.1555 pivot highlights the prevailing bearish sentiment. The next major technical convergence is located near 1.1475, aligning with a previous swing low from July 2024. Within the range of 1.1420–1.1400 lies the ultimate line of defense, and a breach in this area could allow bears to aim for 1.1350, a crucial support level that has held firm over several months. On the other hand, a strong recovery and steady daily close above 1.1610 would indicate short-covering dynamics, targeting 1.1670, then 1.1700, and ultimately 1.1750, if U.S. data underperforms expectations. Market participants display a cautious yet engaged approach, with speculative euro longs cutting exposure for the second week in a row, while U.S. dollar longs have increased slightly, showing rising confidence in the dollar’s strength. The data shows that net long USD positions have hit their highest level since August 2024. Nonetheless, certain experts warn that a stretched dollar could prompt profit-taking if U.S. data does not align with expectations. At present, EUR/USD is in a careful position, with 1.1500 acting as the key level. As long as EUR/USD stays below 1.1610, the trend favors sellers, with continued pressure around 1.1475–1.1440 shaped by steady U.S. rates and Eurozone stagnation. A possible HOLD stance could emerge if the pair closes above 1.1620, signaling short-covering and reduced dollar momentum, while upward moves toward 1.1560–1.1600 remain opportunities to re-enter short positions targeting 1.1450–1.1470.