What to Know

  • EUR/USD is under pressure as the US Dollar remains the dominant force across the Forex market.
  • Long term US Treasury yields recently reached the highest level seen in almost twenty years, supporting demand for the greenback.
  • The US Dollar is slightly below its two month high but continues to benefit from expectations of tighter Federal Reserve policy.
  • CME FedWatch pricing shows a 70% probability of a further 0.25% Federal Reserve rate hike at the next meeting in October, up from 53% a couple of weeks ago.
  • The European Central Bank raised its deposit rate to 2.50% in September, offering some support to the Euro.
  • Eurozone growth is forecast at 0.9% for 2026, while inflation is projected at 3.0%.
  • Technical traders are watching 1.1375 as a key support area and potential bearish trigger if EUR/USD becomes established below it.
  • Nearby resistance is seen at 1.1406, with added importance from the round number area at 1.1400.
  • EUR/USD remains in a long term bearish trend, making short setups more aligned with the broader direction than long setups.
  • There is no high importance data scheduled today concerning either the Euro or the US Dollar.

Dollar Strength Remains the Main Driver

EUR/USD continues to trade under the influence of a strong US Dollar, with the greenback shaping sentiment across the wider Forex market. The latest pressure on the pair is being driven more by the Dollar side of the equation than by a fresh deterioration in the Euro itself. That is a familiar pattern in currency markets, where the US Dollar is involved in about 75% of overall trading volume and often acts as the central transmission channel for shifts in global rates, risk appetite and capital flows.

The US Dollar has gained ground recently across much of the market, and technical traders are now watching whether the greenback can convert this strength into major breakouts against European currencies such as the Euro and the British Pound. For EUR/USD, the immediate question is whether the recent bearish trend extends through nearby support, or whether the current consolidation develops into a recovery attempt.

The backdrop remains supportive for the Dollar. Long term Treasury yields recently reached the highest level seen in almost twenty years, and that has helped maintain demand for US assets. Although the Dollar is now somewhat below its two month high, yields remain close to levels that continue to attract attention from global investors. Higher yields can support a currency by increasing the return available on assets denominated in that currency, especially when other major economies are facing slower growth or more fragile outlooks.

Fed Expectations Keep Pressure on EUR/USD

Markets are also assigning a stronger probability to another Federal Reserve rate increase. CME FedWatch pricing now shows a 70% probability of the Fed making a further 0.25% rate hike at its next meeting in October. That is a clear rise from 53% just a couple of weeks ago. This repricing matters for EUR/USD because expectations of tighter US monetary policy can lift Treasury yields, strengthen rate differentials and increase demand for the Dollar against lower yielding or slower growth currencies.

US economic growth is not especially impressive, but it remains relatively strong compared with several other developed economies. Inflation is also lower than in most other OECD economies, giving the United States a relatively favourable macro profile. Some market participants also see policy efforts designed to pull money into the United States and its capital markets as another factor creating structural demand for Dollars. While that view does not eliminate the risk of a Dollar pullback, it helps explain why sellers have remained active in EUR/USD during recent sessions.

For traders, the key issue is not simply whether the Dollar is strong, but whether it is strong enough to force EUR/USD below the support area that has recently defined the lower end of the short term range. The pair has shown signs of stabilisation after a strongly bearish period lasting about two weeks, but the broader trend remains pointed lower. That makes any bullish signal more tactical than strategic unless resistance can be cleared with conviction.

Euro Fundamentals Offer Support but Not a Clear Bull Case

The Euro side of the equation is mixed. The European Central Bank raised its deposit rate to 2.50% in September, which gives the currency some policy support. Tighter monetary policy can help a currency by increasing returns available in that region and signaling central bank concern about inflation. The ECB also expects the Eurozone economy to remain resilient, which prevents the bearish case from becoming entirely one sided.

However, the growth outlook limits the argument for a strongly bullish Euro view. Eurozone growth is forecast at 0.9% for 2026, while inflation is projected at 3.0%. That combination leaves the region exposed to high energy costs and additional price pressure. It also means the Euro faces a challenging balance between policy support and modest economic momentum. A central bank can raise rates, but if growth remains limited, investors may hesitate to aggressively bid the currency higher.

That contrast helps explain why EUR/USD has struggled to turn higher despite some support from ECB policy. The Euro is not without backing, but the Dollar has the clearer near term catalyst through yields and Fed expectations. As a result, the path of least resistance remains lower unless buyers can force a break above nearby resistance and hold the pair above the current range.

Technical Picture: 1.1375 and 1.1406 Define the Range

Price action over the past few days suggests that EUR/USD may be trying to form a bullish base after roughly two weeks of heavy selling. Some chart watchers see early signs on the hourly chart of a possible bullish head and shoulders pattern, with baseline support near 1.1375. The challenge is that the pattern does not have a clear neckline, which reduces its reliability as a standalone bullish signal.

For bears, 1.1375 is the important level. If EUR/USD becomes established below 1.1375, technical traders are likely to view that as a bearish sign and a potential short entry trigger. A daily close below that level would carry more weight because it would suggest the market has accepted lower prices beyond an intraday move. In a long term bearish trend, that type of close can attract trend following participation.

For bulls, the first important test is 1.1406. This is the strongest nearby resistance level and is also close to the round number at 1.1400. A break above 1.1406 would not automatically reverse the broader trend, but it would reduce immediate downside pressure and could suggest that the recent base is gaining traction. Until that happens, bullish trades remain countertrend and require careful management.

The current range between 1.1375 and 1.1406 is therefore the main decision zone. A sustained move below the lower boundary would strengthen the bearish case. A move above the upper boundary would give bulls a short term opening. Without a clean break in either direction, EUR/USD may remain difficult to trade for participants who prefer trend clarity.

Trade Levels Being Watched by Market Participants

Some technical traders are focused on short setups if bearish price action appears on the hourly timeframe after the next touch of 1.1487, 1.1525 or 1.1563. These levels sit above the current market focus and may be viewed as potential resistance zones if EUR/USD rebounds before sellers return. In that kind of setup, risk is often managed by placing a stop loss just above the local swing high.

Other chart watchers are monitoring possible long setups if bullish price action appears on the hourly timeframe after the next touch of 1.1389, 1.1406 or 1.1431. These are tactical levels rather than a broad bullish endorsement, because the larger trend remains bearish. A long attempt near support would depend heavily on the quality of the reaction and the trader’s ability to manage risk quickly if the bounce fails.

Risk management remains central. One framework discussed by technical traders uses 0.75% risk, with trades considered only before 5pm London time today. Some participants look to adjust stop losses to break even once a position moves 20 pips in profit, then remove 50% of the position as profit at the same 20 pip threshold while leaving the remainder to run. This approach is designed to reduce exposure after an initial favorable move while still allowing for potential continuation.

Classic price action reversal signals on the hourly chart include candle formations such as a pin bar, a doji, an outside candle or an engulfing candle with a higher close. These formations do not guarantee a reversal, but they can help traders identify whether buyers or sellers are actively defending a level. In the current EUR/USD environment, the location of the signal matters as much as the candle itself, especially near 1.1375 and 1.1406.

FXCOINZ View: Bearish Bias Remains Favoured

The more tradable outcome remains a move lower, provided EUR/USD breaks out of the current range and becomes established below 1.1375. The broader trend is bearish, the Dollar remains supported by yields and Fed expectations, and trend following participants may be more comfortable joining short positions than attempting to catch a durable bottom.

That said, chasing price inside the narrow range carries added risk. The area between 1.1375 and 1.1406 is tight enough to produce false breaks, whipsaw movement and low reward setups. Waiting for a cleaner break may offer a better balance between confirmation and entry quality. For aggressive traders who believe the Dollar is due a pullback, a carefully managed long scalp from 1.1375 could be considered if a clear bounce develops, but that remains a countertrend idea rather than the primary scenario.

There is no high importance data scheduled today concerning either the Euro or the US Dollar, which means price action may be guided more by yield moves, positioning and technical levels than by a fresh macro catalyst. In that environment, the closing level around 1.1375 may be especially important. A daily close below that point would likely reinforce the bearish case, while a failure to break it could keep EUR/USD trapped in consolidation for longer.

Frequently Asked Questions (FAQs)

Why is EUR/USD under pressure?

EUR/USD is under pressure mainly because the US Dollar remains strong. Rising long term Treasury yields, stronger expectations for another Federal Reserve rate increase and demand for Dollar denominated assets are all weighing on the pair.

What is the key EUR/USD level to watch?

The key support level is 1.1375. If EUR/USD becomes established below 1.1375, technical traders may view it as a bearish signal, especially if the move is confirmed by a daily close.

What resistance level matters most for EUR/USD now?

The nearby resistance level to watch is 1.1406. It is important because it is the strongest nearby resistance area and is also close to the round number at 1.1400.

Is EUR/USD in a bearish trend?

Yes. EUR/USD remains in a long term bearish trend, which means short setups currently have more alignment with the broader market direction than long setups.

How are Fed expectations affecting the pair?

CME FedWatch pricing shows a 70% probability of a further 0.25% Federal Reserve rate hike at the next meeting in October, up from 53% a couple of weeks ago. That shift supports the Dollar and adds pressure to EUR/USD.

Does the Euro have any fundamental support?

The Euro has some support from the European Central Bank, which raised its deposit rate to 2.50% in September. However, modest Eurozone growth and projected inflation continue to limit the case for a strongly bullish Euro outlook.

Could EUR/USD still bounce from current levels?

Yes. A bounce is possible if buyers defend the 1.1375 area and price action produces a credible bullish reversal. However, any long trade remains countertrend unless EUR/USD can break above nearby resistance and hold higher.

Are there major Euro or Dollar data releases today?

There is nothing of high importance scheduled today concerning either the Euro or the US Dollar. That may leave technical levels, Treasury yields and positioning as the main drivers for EUR/USD.