EUR/USD Price Forecast - Euro to Dollar Breaks Higher to 1.1630 as U.S. Shutdown Resolution Sparks Dollar Selloff

EUR/USD surges toward 1.1630 as the 43-day U.S. shutdown collapse hammers dollar momentum

EUR/USD climbs into the 1.1615–1.1630 region after breaking a ceiling that rejected the pair for weeks, driven by a U.S. Dollar that instantly weakened once the 43-day government shutdown ended with a narrow 222–209 House vote. President Trump’s late-night signature eliminated the political risk premium that artificially supported USD demand, forcing traders to unwind defensive long-dollar positions built through the crisis. EUR/USD briefly pushed above 1.1630, its highest since late October, before recalibrating ahead of a wave of delayed U.S. reports—many of which the White House warned may never be released, including October CPI, payrolls, and PCE. This data blackout leaves the USD trading without its primary valuation anchor, enabling EUR/USD to extend a multi-session rebound even as Eurozone fundamentals underperformed expectations.

EUR/USD capitalizes on collapsing U.S. labor momentum while Fed split deepens policy uncertainty

The latest private-sector job metrics showed U.S. employers cutting 11,250 jobs per week in late October, while Challenger layoffs more than doubled month-over-month—a pattern that aligns with official NFP adding only 80,000 jobs, far below forecasts. These combined data points pushed rate-cut expectations sharply higher earlier in the week, but the CME FedWatch now shows fluctuating conviction: odds of a 25-bps December cut fell from 67% to roughly 54–60% as Fed officials delivered conflicting comments. Governor Miran argued policy is “too restrictive”, blaming higher real rates for labor weakness, while Raphael Bostic countered that deeper cuts could “feed the inflation beast,” insisting the labor market remains in a “curious balance.” This disconnect has become a direct catalyst for EUR/USD volatility, as traders price an increasingly uncertain U.S. curve while the Euro gains relative stability from a unified ECB stance.

EUR/USD absorbs Eurozone softness as weak industrial output limits—but does not erase—Euro demand

Europe’s own macro signals underperformed, yet EUR/USD remained elevated because USD deterioration was stronger. Eurozone Industrial Production grew 0.2% in September after a 1.1% decline in August, far below expectations of 0.7% monthly and 2.1% annual gains. German HICP held at 0.3% MoM and 2.3% YoY, slightly below the prior 2.4%, while German CPI also printed 0.3%, easing YoY from 2.4% to 2.3%. The ZEW survey slipped from 39.3 to 38.5, signaling cooler sentiment. However, the ECB’s consistency—highlighting that current rates are “absolutely appropriate”—provided a steadiness that contrasts sharply with the Fed’s mixed internal messaging. As defensive dollar positioning unwinds, even weak Eurozone data cannot offset the structural pressure on USD, allowing EUR/USD to keep reclaiming lost ground.

EUR/USD technical structure strengthens as bulls defend 1.1575 ahead of critical break zone at 1.1620–1.1670

Price action shows EUR/USD firmly eroding the descending channel that has capped every breakout attempt since early October. The pair reclaimed the 20-day EMA at 1.1584, then pressed toward the confluence zone where the 50-day EMA and 38.2% Fibonacci retracement of 1.1822–1.1386 meet near 1.1619. A sustained daily close above 1.1620 opens a direct path to 1.1670, followed by the October 17 swing high near 1.1730. The RSI above 60 shows strengthening bullish momentum without entering exhaustion. The Parabolic SAR flipped bullish for the first time since late October. On the downside, buyers continue to defend 1.1575, followed by deeper supports at 1.1540, 1.1500, and the critical 1.1470 level that formed November’s base. As long as EUR/USD stays above 1.155, the broader rebound structure remains intact.

EUR/USD positioned between a weakening U.S. economy and a steady ECB as traders recalibrate for December’s volatility window

The reopening of the U.S. government temporarily improved sentiment, but the absence of October economic data leaves markets blind to inflation and employment trends heading into the December FOMC. Rate-cut probabilities remain clustered around 54–60%, with futures markets still pricing a high risk that recessionary dynamics will drag the Fed toward easing despite Bostic’s resistance. Meanwhile, ECB officials maintain a unified posture, supported by stable Eurozone inflation—even if growth momentum continues cooling. This macro divergence is visible in the heat-map: EUR gained 0.13% vs USD, 0.16% vs JPY, 0.11% vs CAD, while underperforming only against AUD. The pair now trades inside a 1.145–1.172 accumulation corridor rebuilt since early November.

EUR/USD outlook dominated by U.S. data vacuum, Fed policy fracture, and a technical structure that favors bullish continuation

The absence of U.S. October CPI, PCE, and payrolls deprives the Dollar of its fundamental anchor at the worst possible moment—during a period of weakening labor conditions, diverging officials, and rising expectations for a December policy shift. EUR/USD remains insulated by an ECB that sees no reason to ease, a Eurozone inflation profile that stabilizes near 2.3%, and a technical breakout that continues building. Traders are watching speeches from Kashkari, Musalem, and Hammack for clues, but unless the Fed signals renewed hawkish urgency, EUR/USD remains biased toward grinding higher into the 1.1669–1.1730 band. With support intact at 1.1575 and 1.1540, the pair continues to favor appreciation rather than reversal.

Decision: EUR/USD = BUY
The macro divergence, technical breakout, falling U.S. labor momentum, shutdown resolution, and consistent ECB stance all support further EUR/USD upside from current levels

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