EUR/USD commenced Monday facing increasing pressure, retreating towards $1.1600 and consistently struggling to regain $1.1660, the 50-day EMA that has hindered every bullish effort throughout November. The pair’s rejection from $1.1670 last week initiated a significant reversal, pulling the euro down towards the $1.1575–$1.1570 demand zone, a level that has been defended several times this year but is now vulnerable as sellers increase their dominance. The U.S. Dollar Index’s rise toward $99.40 has eliminated any leeway for EUR/USD, pushing the spot into levels not observed since early November. Every bounce into $1.1620–$1.1640 is viewed as a chance to sell as the optimism for rate cuts has decreased from 67% last week to 46% for December. The complete euro-dollar framework underwent a recalibration following the remarks from several Fed officials, which effectively dismantled the anticipation of aggressive easing measures. Kansas City Fed President Jeffrey Schmid emphasized the necessity for the central bank to “lean against demand growth,” whereas St. Louis Fed President Musalem cautioned that policy remains “close to neutral,” indicating it is not yet prepared to endorse early cuts. Market participants rapidly exited their euro long positions, causing EUR/USD to plummet from the $1.1655 peak down to the $1.1600 support level. The broader U.S. front-end experienced a decline in the 2-year Treasury to 3.60%, while the 10-year fell to 4.14%. This movement underscores the cautious bond flows that continue to favor the dollar amid ongoing inflation uncertainty. For EUR/USD, this indicates that the path of least resistance remains directed downward until the macro uncertainty surrounding postponed U.S. labor and inflation data is resolved.
The technical analysis indicates that the pair is struggling to recover its previous channel from November. The unsuccessful attempt to break above the descending trend boundary earlier this month now serves as a strong rejection point, with the price constrained below both the 20-day EMA at $1.162 and the 50-day EMA at $1.166. Momentum indicators reflect this transition. The Parabolic SAR has once again positioned itself above the price action, indicating a confirmation of bearish pressure, while the RSI persists in rejecting attempts at mid-range recovery. Fibonacci levels indicate a consistent narrative: EUR/USD struggled to maintain the 0.618 retracement around $1.165, and this setback has directed the spot back toward the 0.5 and 0.382 zones. Consequently, $1.157 stands as the final structural support before the market potentially moves toward $1.1500 and the early-August swing at $1.1470. The euro’s downside is supported by widespread expectations that the ECB will keep its deposit rate steady until 2026, providing stability without generating upward momentum. Market participants understand that the ECB is unable to make a significant shift as long as price stability in the Eurozone stays above the target and wage dynamics continue to be constrained. In the interim, the lack of U.S. data due to the government shutdown has led to a situation where positioning takes precedence over price movements. As the September nonfarm payrolls are scheduled for release on November 20, followed by the October PCE inflation data the next week, EUR/USD finds itself in a holding pattern. In this scenario, it is the U.S. data that drives the movements, rather than Eurozone policy. Traders should note that Thursday’s NFP represents the first significant U.S. economic update in 43 days, which could lead to heightened volatility in EUR/USD liquidity.
The currency heat map indicated that the USD appreciated by 0.17% relative to the euro, surpassing its performance against the pound at 0.14% and the franc at 0.11%. This widespread demand for USD highlights the euro’s comparative weakness. The dollar’s ascent occurred despite a slight easing in U.S. yields, underscoring that the main driver is rate-cut repricing rather than risk appetite. EUR/USD currently ranks among the weakest performers in the foreign exchange market today, struggling to draw in dip-buyers even as it approaches its multi-week support range of $1.157–$1.160. Participants in the market are remaining on the sidelines until there is greater clarity in the macroeconomic landscape, a trend that persistently directs liquidity towards trades that favor the USD. The psychological framework surrounding EUR/USD adopted a distinctly defensive stance this week. Thursday’s rejection at $1.1655, along with the failure to test $1.1685—the upper boundary monitored by various models—delivered a definitive signal: bullish conviction has dissipated. Traders are currently consolidating short exposure around $1.1620, anticipating confirmation of a move towards $1.157. Options desks indicate increased positioning near $1.1500, suggesting that markets are gearing up for a continuation should critical U.S. labor or inflation figures exceed expectations. Short-term momentum currently views any rebound above $1.162–$1.164 as corrective rather than indicative of a trend change.
The framework is well-defined. A decline beneath $1.157 triggers intensified selling pressure targeting $1.1500, coinciding with the 78.6% retracement level of the autumn rally and representing a significant psychological threshold for the fourth quarter. Below that lies the early-August floor at $1.1470, a level that would indicate a complete trend reversal. On the opposite side of the chart, buyers will not be able to reclaim control until EUR/USD surpasses $1.1660, the 50-day EMA. A breakout above $1.1700 would significantly alter sentiment, paving the way to $1.1730, $1.1760, and the summer ceiling at $1.1800–$1.1820. As long as the pair stays beneath these thresholds, a bearish bias prevails. EUR/USD continues to exhibit a SELL posture. The interplay of a robust dollar, diminishing Fed-cut anticipations, unsuccessful efforts to regain both the 20-day and 50-day EMAs, along with a tight macro calendar that promotes USD volatility, positions the euro unfavorably. The pair needs to maintain $1.157 to prevent a decline towards $1.1500; however, any upward movement is limited unless buyers can regain $1.1660 and move convincingly above $1.1700.