The Euro is stabilizing against a strong US Dollar (USD) on Monday but remains under pressure near key support levels. The pair trades around 1.1530 in early European hours, just above a fresh three-month low of 1.1520 touched earlier in the session.
The EUR/USD has dropped nearly 1% over the past three trading days, weighed down by a broad USD rally following the Federal Reserve’s hawkish tone and optimism surrounding the US-China trade deal.
Market Mood: Dollar Strength and Cautious Risk Appetite
Market sentiment remains cautious, favoring the Greenback as investors reassess the Fed’s policy outlook. Following Fed Chair Jerome Powell’s remarks last week, markets have sharply reduced expectations for another rate cut this year. According to the CME FedWatch Tool, the probability of a 25 bps cut in December has fallen to 67%, down from over 90% before the meeting.
In Asia, trading was subdued due to the Japanese bank holiday, limiting early-session volatility. In Europe, Bundesbank President and ECB Governing Council member Joachim Nagel said Monday that the region’s economic performance remains broadly in line with projections, while stressing that “all options remain open” for upcoming policy meetings.
Focus Turns to PMI Data
Investors’ attention now shifts to key manufacturing data releases. The Eurozone Manufacturing PMI (final) for October is due at 09:00 GMT, expected to confirm a modest improvement to 50.0 from 49.8 in September.
Later in the day, the US ISM Manufacturing PMI and S&P Global Manufacturing PMI will provide further insight into industrial activity. The ISM index is expected to edge up to 49.2, while the S&P Global PMI is seen steady at 52.2, pointing to slight expansion.
With the US government shutdown entering its fifth week, private survey data like the ISM report remains crucial for assessing the underlying economic picture.
Upcoming Central Bank Commentary
ECB Chief Economist Philip Lane is scheduled to speak later in the European session, while Fed officials Mary Daly and Lisa Cook are due to comment during the US session — potentially offering more clues on the monetary policy outlook.
Technical Analysis: EUR/USD Testing Key Support
The EUR/USD pair broke below the lower boundary of its monthly triangle pattern last week, reinforcing the bearish outlook. Current price action shows the pair testing the 1.1530 support — a zone that aligns with the August 5 low and the 161.8% Fibonacci retracement of the late October rebound.
- Immediate resistance is seen at 1.1550 (October 30 low), followed by 1.1580 (October 22–23 lows).
- A sustained move above 1.1580 would shift focus to 1.1635.
- On the downside, a clear break below 1.1530 could open the door toward 1.1440, with further support near 1.1390 (August 1 low).
The Relative Strength Index (RSI) remains above oversold territory, suggesting potential for minor rebounds, while the MACD histogram continues to print red bars, confirming bearish momentum.
Euro Performance Snapshot
| Base | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| EUR | 0.01% | — | 0.07% | 0.09% | 0.03% | -0.13% | -0.13% | 0.03% |
The Euro shows mild gains against the Japanese Yen but remains soft against most other majors.
