EUR/USD Breaks September Trend, Buyers Hesitate
EUR/USD recovers to 1.1201, but momentum stays weak. Which levels matter ahead of the Fed and ECB.
Key Takeaways
- EUR/USD has recovered more than 1.4% from its October lows and trades near 1.1201.
- The September downtrend is broken, but buyers remain hesitant.
- The 1.1110–1.1130 zone is where the direction gets decided.
The euro is stabilizing, but without conviction yet. EUR/USD trades around 1.1201 on Thursday, about 1.4% above its October lows. Before that, the pair had slid more than 4.6% from its September high. Whether this becomes a reversal will be decided at a handful of price levels in the coming days.
The Euro Breaks the September Trend but Fails to Gain Traction
Michael Boutros, technical strategist at FOREX.com, sees the recovery as progress: it has broken the downward line from September. At the same time, he notes that momentum remains weak and euro bulls struggle to extend the move.
The first hurdle sits at 1.1276, the 2023 high. Above it lies a zone between 1.1342 and 1.1360, which Boutros calls key resistance. Further targets would be 1.1412 and the area around 1.15. On the downside, the safety net runs to 1.1156, the lowest daily close of the year. In his reading, a daily close below 1.1110–1.1130 would resume the broader downtrend that began in August.
Fed and ECB Set the Tone Next Week
For the euro, the central bank week matters more than the chart. According to FOREX.com, the ECB is expected to leave rates unchanged. For the Fed on October 28, Robin Brooks, an economist and currency watcher, also does not expect a hike. He sees no realistic scenario for one. Even an oil shock, with Brent rising from roughly $110 to $125, would in his view hold the central bank back, since tighter financial conditions would weigh on equities.
The market sees it similarly calmly. According to Brooks, only about 4 basis points of a hike are priced in, after a hot inflation reading barely moved expectations. That takes away part of the dollar's tailwind without giving the euro a lift of its own. In between, Friday's preliminary October PMIs for the eurozone and the U.S. and the Michigan consumer sentiment survey are the next catalysts.
What momentum says
The momentum picture for EUR/USD is mixed. Momentum signals a bullish state on the 4-hour chart, but neutral on the hourly and daily. The weekly view remains bearish. The recovery therefore rests on short-term shoulders so far, while the larger trend still runs against the euro.
Scenarios
If the euro holds above 1.1276 and closes above it, Boutros sees the path opening toward 1.1342–1.1360. That is where it would become clear whether the recovery amounts to more than a counter-move.
If the price fails at 1.1276, the range between 1.1156 and resistance remains the most likely stage until the central bank meetings.
If EUR/USD instead closes below 1.1110–1.1130 on a daily basis, the recovery would be invalidated. FOREX.com then names 1.1032 as the next level.