EUR/USD Price Slides to 1.1770 as Strong U.S. Data and German Disinflation Weigh on Euro

EUR/USD Slips to 1.1770 as Dollar Strengthens on Data and Fed Tone

The EUR/USD pair retreated to 1.1770, extending a three-day losing streak after failing to sustain above the four-year high near 1.1900 earlier this week. Dollar demand revived after U.S. initial jobless claims dropped sharply by 33,000 to 231,000, far below the prior 264,000, while the Philadelphia Fed manufacturing index bounced to 23.2, the best level since January. The Euro, meanwhile, faced additional selling pressure from domestic political unrest in France, where anti-austerity protests surged and threatened fiscal stability.

Federal Reserve Policy Outlook and U.S. Court Dynamics Support USD

The Federal Reserve’s latest 25 bps rate cut was initially seen as dovish, but Chair Powell’s insistence on a “meeting-by-meeting” path kept expectations measured. Futures still price a 90% probability of another cut in October and 80% odds of one in December, though Powell underscored that tariff-driven inflation remains a live risk. A separate court battle added intrigue after the U.S. Supreme Court scheduled a November 5 decision on Trump’s tariffs—policies that could further shape the Dollar’s trajectory. The combination of resilient labor data, a stronger manufacturing pulse, and limited scope for immediate aggressive easing reinforced the Greenback’s near-term bid.

ECB Rhetoric and Weak German PPI Drag on the Euro

On the European side, ECB Vice President Luis de Guindos repeated that current policy remains “appropriate” but acknowledged high uncertainty, suggesting easing could continue if needed. ECB Governing Council member Mario Centeno was more explicit, warning inflation cannot be tolerated below 2% for too long and hinting at further cuts. Meanwhile, Germany’s PPI fell 2.2% year-over-year in August, accelerating from -1.5% in July and weaker than the -1.6% expected. On the month, prices fell 0.5%, a sign of disinflation at the factory gate, undermining Euro sentiment and stoking concerns of slower demand across Europe’s supply chains.

French Political Pressure Adds to EUR/USD Headwinds

Beyond macro data, French domestic unrest is weighing on the Euro. Hundreds of thousands gathered across Paris, Lyon, and Marseille to demand that President Emmanuel Macron and new Prime Minister Sébastien Lecornu abandon spending cuts inherited from François Bayrou’s government. With fiscal credibility in doubt and protests intensifying, investors remain cautious on Euro-denominated assets, compounding downside pressure on EUR/USD.

Technical Breakdown: Key Levels Defended at 1.1750–1.1760

From a technical perspective, the pair has broken below its rising trendline and now consolidates near 1.1750–1.1760, a support area tested repeatedly since September 15. Momentum indicators confirm the weakness: the RSI sits below 50 on the 4-hour chart, while short-term EMAs cross beneath longer averages. If bears press further, 1.1710–1.1700 becomes the next defensive zone, aligned with the late August trendline. A clean break lower exposes 1.1660, the September 11 trough. On the topside, 1.1790 intraday resistance must be cleared before testing 1.1850 and the September 16 high at 1.1878. Price fatigue is visible after repeated failures at the 1.1840–1.1880 corridor.

Dollar Index and Broader FX Context

The U.S. Dollar Index trades around 97.40, supported by Powell’s cautious stance and stronger-than-expected data. Immediate support sits at 97.20, while resistance lies near 97.60–97.78. RSI at 62 shows building momentum, though the broader trend remains capped by longer-term resistance. Against peers, the Euro weakened 0.36% versus USD, but showed relative strength against the British Pound, gaining 0.19%. This divergence highlights how Euro weakness is concentrated against the Dollar rather than across all crosses.

Investor Sentiment and Short-Term Scenarios for EUR/USD

Markets remain split on whether EUR/USD stabilizes near 1.1750–1.1770 or accelerates its downside. With Fed futures pointing toward additional easing but U.S. data showing resilience, Dollar rallies may be contained, yet buyers are absent as European inflation fades and unrest grows. The short-term setup tilts bearish, with traders eyeing a retest of 1.1700 unless fresh catalysts—such as stronger German or Eurozone data—emerge. A recovery above 1.1820 is required to neutralize the bearish bias and rebuild momentum toward 1.1900.

Market Verdict: EUR/USD Bias Turns Bearish With 1.1700 in Play

The mix of U.S. macro strength, court-driven tariff headlines, dovish ECB tones, and German disinflation leaves the Euro vulnerable. Unless EUR/USD reclaims the 1.1820 threshold quickly, the structure points to continued weakness. The verdict is clear: EUR/USD is a Sell on rallies below 1.1820, with downside targets at 1.1710 and 1.1660, while only a sustained close above 1.1850 would restore bullish traction.

That's TradingNEWS