The EUR/USD pair continues to experience persistent downward momentum, currently trading around 1.1560 after recording losses for the third consecutive session. The pair briefly reached 1.1540, establishing a new two-week low, as the U.S. Dollar regained strength in anticipation of the FOMC minutes and Non-Farm Payrolls. Market sentiment continues to be defensive, as traders adopt a cautious stance in anticipation of forthcoming macro catalysts. The present price movement indicates constricted intraday ranges while maintaining a consistent bearish sentiment, underpinned by a fundamental divergence between the Federal Reserve and the European Central Bank. Reports indicates a mere 49% likelihood of a 25-basis-point rate cut in December, a significant decline from the 67% observed last week, as market participants reevaluate the Federal Reserve’s readiness to implement easing measures. This repricing has elevated the Dollar Index close to 100.00, constraining EUR/USD recoveries. The most recent U.S. Initial Jobless Claims increased to 232,000, and Continuing Claims reached 1.957 million, while ADP employment data indicated private job losses averaging 2,500 per week. In light of the recent softer jobs data, short-term flows continue to support a positive outlook for the dollar, driven by pre-FOMC hedging activities.
Richmond Fed President Thomas Barkin highlighted the improvement in labor conditions, citing “better worker availability” and a reduction in wage pressure. However, he cautioned that inflation continues to be inconsistent with the 2% target. The remarks indicate a split among committee members in anticipation of Wednesday’s minutes. Any hawkish tone could accelerate EUR/USD’s slide below 1.1550, while dovish language might trigger a short-covering rebound toward 1.1620–1.1650. The macroeconomic landscape in Europe is showing signs of continued deterioration. Eurozone Q3 GDP remained unchanged at 0.1%, while Germany’s manufacturing PMI decreased to 44.8, heightening worries about industrial decline. Inflation is currently stable at approximately 2.2%, which diminishes the necessity for additional rate increases. The ECB deposit rate is currently at 4.00%, with futures indicating a 40% probability of a reduction by the first quarter of 2026. The differing policy paths of the Fed and ECB have led to increased yield spreads, complicating the euro’s ability to maintain rallies above 1.1600. Currently, EUR/USD is positioned beneath its 20-day EMA and the descending trendline established in late September. The RSI is currently at 46, indicating a slight bearish momentum that lacks exhaustion, whereas the MACD remains in negative territory.
The pair is currently navigating the 1.1550–1.1570 demand zone, a range that has consistently drawn in dip-buyers; however, the momentum continues to show signs of weakness. A decisive move below 1.1550 would reveal 1.1500 as the next target, whereas resistance is observed at 1.1610 and 1.1650. The four-hour chart illustrates a series of lower highs and pronounced selling wicks, indicating a persistent downside bias until a clear close above 1.1610 is achieved. Recent U.S. data has strengthened the case for the dollar’s rebound. The Empire State Manufacturing Index increased to 18.7 in November — marking its highest level in a year — while construction spending rose by 0.2% in August. The reported figures contradicted forecasts of a deceleration, leading to a decrease in speculation regarding immediate easing measures. Nordea Bank anticipates that EUR/USD will increase to approximately 1.24 by the end of 2026, contingent upon a policy shift in the U.S. next year. Nonetheless, that situation relies on a eurozone recovery that is not currently evident in the available data. The Eurostat report on retail sales indicated a 0.3% monthly decline, while German factory orders decreased by 0.8%, highlighting the fragility of domestic demand. The competitiveness of the eurozone has been further diminished by energy-related cost pressures and a lackluster export performance. The bloc’s current-account surplus is narrowing, leading to a weakened structural bid under the euro, which permits USD strength to prevail in the short term. Yield spreads continue to be the key macroeconomic influence. The 10-year U.S. Treasury yield is currently positioned at approximately 4.14%, whereas the German Bund yield remains around 2.43%, maintaining a gap of 171 basis points, the most significant since March. This differential persists in limiting euro appreciation and drawing carry trades that favor the dollar. Positioning data substantiates this perspective: the CFTC indicates a 22,000-lot rise in net euro shorts, marking the most significant weekly increase since mid-2024.
Implied volatility is currently subdued in anticipation of Thursday’s NFP, yet traders are bracing for a significant increase once the data is released. A robust U.S. jobs report may push EUR/USD beneath 1.1500, whereas a disappointing figure could elevate the pair towards 1.1650. Intraday structure indicates a lateral movement within the range of 1.1540–1.1600, with momentum showing a slight advantage to sellers. The 10-day ATR has narrowed to 45 pips, suggesting a period of reduced volatility ahead of a potential breakout. The current balance indicates a stagnant eurozone economy in contrast to a U.S. economy that is undergoing recalibration. The ongoing structural divergence in growth and yields continues to support the dollar’s favorable position. Nonetheless, technical compression around 1.1550 may offer short-term relief rallies should the Fed minutes indicate internal disagreement or suggest a patient approach. If sentiment shifts to risk-on following the NFP report, EUR/USD could approach the 1.1650–1.1725 range; if not, the potential for downside remains toward 1.1450. The prevailing sentiment is negative as EUR/USD continues to trade beneath 1.1610, indicating potential downward movement towards 1.1500 in the short term. Short-term traders need to keep a close eye on the Fed’s language and the outcomes of the NFP for confirmation of potential breakouts. The medium-term outlook shifts to a neutral-to-bullish stance following the peak of the Fed’s tightening, facilitating a gradual recovery toward the range of 1.18–1.20 by 2026. Until then, the pair is classified as a Hold, with a tactical inclination towards selling rallies beneath 1.1610 and safeguarding support around 1.1500.