EUR/USD Extends Losses Ahead of Federal Reserve Decision

Summary:

EUR/USD falls toward 1.1200 as slowing Eurozone growth and French political risks weigh on the Euro. Renewed safe-haven demand and expectations of a possible December Fed rate hike support the Dollar ahead of next week’s key policy and economic releases.

Sell EURUSD

EXP

Trading

1.12000

ENTRY

1.09650

TGT

1.13000

1.12013 -0.00139 -0.12%

Point

Flat

1.09650

TGT

CLOSING

1.12000

ENTRY

1.13000

EUR/USD extended its decline for a second consecutive session on Friday, trading near 1.1200 as disappointing Eurozone business activity data weighed on the Euro, while renewed demand for the US Dollar added further pressure. The latest figures showed the Eurozone Composite PMI falling to 51.9 in October from 53.1 in September, signaling a slowdown in private-sector growth. Weakening economic momentum in Germany and an unexpected contraction in France have reinforced concerns about the region’s outlook, while France’s ongoing political and sovereign debt crisis continues to undermine confidence in the single currency.

The US Dollar, meanwhile, has recovered from a three-week low as escalating Middle East tensions support safe-haven demand. Although Federal Reserve officials have indicated there is no urgency to raise interest rates, markets continue to price in roughly an 80% probability of another hike in December amid concerns that higher oil prices could sustain inflationary pressures. In my assessment, the divergence between weakening Eurozone fundamentals and renewed Dollar demand leaves EUR/USD vulnerable to further losses, although the next move will depend heavily on incoming US data and the Fed’s policy signals.

Investors are now turning their attention to next Wednesday’s Federal Reserve decision, with markets closely monitoring the policy statement and comments from Fed Chair Kevin Warsh for clues about the interest rate outlook. Thursday’s US third-quarter GDP estimate and Personal Consumption Expenditures inflation report will provide additional insight into economic growth and price pressures. Stronger-than-expected US figures or a hawkish Fed message could reinforce Dollar strength, while softer data may give EUR/USD room to recover.

Technical Analysis

EUR/USD is trading near 1.1199, hovering above the low struck on October 14, when the pair touched its weakest level since May 2025. The pair has fallen about 530 pips from the September high near 1.1650 to the 1.1117 wick low, then settled into a range of roughly two and a half weeks. The ceiling at 1.1261-1.1277 has rejected three rallies (highs near 1.1271, 1.1268 and 1.1267), and the latest rejection has the pair rolling over again. That suggests sellers keep the upper hand within what looks like a bearish continuation pattern, although the sharp rebound from the 1.1117 low means confirmation is still needed.

The immediate focus is on the 1.1147-1.1163 support zone, with the October 14 low at 1.1117 beneath it. A decisive H4 close below 1.1147 could strengthen bearish momentum and open the door toward 1.1117, followed by the 1.1000 round number. A break of 1.1117 would complete the range breakdown. The measured move, the 154-pip range height (1.1271 to 1.1117) projected from the low, points to about 1.0965. If sellers maintain control, the pair could extend toward the 1.0950 area, in line with your projected path.

However, the pair remains vulnerable to a squeeze if buyers defend the floor again. A rebound could target the 1.1215-1.1221 mid-range resistance, and a sustained move above 1.1277 would shift focus to the broken 1.1353-1.1367 zone. The critical upside level remains 1.1277, and a close above it would invalidate the bearish scenario. Buyers showed they can defend this floor when the October 14 spike low reversed about 150 pips within days.

Overall, EUR/USD has a cautiously bearish short-term outlook, with a sustained break below 1.1117 needed to confirm further downside toward 1.0965-1.0950. Until that breakdown occurs, the pair could keep rotating between 1.1117 and 1.1277 within the broader downtrend.

TRADE RECOMMENDATION

SELL EUR/USD

ENTRY PRICE: 1.1200

STOP LOSS: 1.1300

TAKE PROFIT: 1.0965

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

3156

Win Rate

63.79%

P/L Ratio

0.73

Focus on

XAUUSD, EURUSD, GBPUSD

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