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The EUR/USD currency pair moved fairly calmly on Monday, but with a downward bias again. Last week, we saw a brief pause, but that marked the end of the euro's fairy tale. The euro again failed to show even a minor correction. And the list of reasons for the euro's decline can go on indefinitely: the budget crisis in France, the EU's weak energy independence, tightening Federal Reserve policy, and geopolitical tensions in the Middle East and Eastern Europe. Each of these reasons long ago began to sound overly formal.
Recall that France's budget crisis is not so big that the euro should fall like a stone. France is only one country in the European Union, and in the US the budget crisis has been ongoing for years. The US budget runs a deficit every month, and Donald Trump each year provokes "shutdowns" because he cannot agree with Democrats on raising the debt ceiling. By the way, the public-debt problem is another possible "reason" the euro might fall. Government debt in EU countries keeps growing, and yields on all types of bonds keep rising, adding budgetary strain. But the US faces the same problem, and the market ignores it.
The European Central Bank's monetary policy in 2026 is tighter than the Fed's. The ECB has already raised interest rates twice, while the Fed may not raise rates again until December. Traders should remember that it is not the current level of ECB versus Fed rates that matters — that is already priced in. What matters are the rate changes now and in the near future that the market expects. Those changes indicate the ECB is raising rates faster than the Fed. Consequently, on that factor alone, the euro should have an advantage over the dollar. But the market is not interested in that fact either.
Geopolitical tension remains stable, if you can call it that. The situation in the Middle East is unchanged, and Donald Trump has shifted his attention to the Congressional elections and to the conflict between Ukraine and Russia, which (as the US president recalled after a year and a half) needs to be resolved within 24 hours. Trump needs low fuel prices ahead of the Congressional elections, so he is doing everything possible to force Kyiv to stop strikes on the Russian refining sector. Kyiv refuses, and Trump threatens to cut off any US support to the EU and Ukraine in confronting Moscow. However, the White House leader is unlikely to achieve anything with such threats. Just as Iran has the Strait of Hormuz as its trump card, Ukraine has strikes on Russian refineries as its card. Even if it is not a trump card, it is a significant asset Kyiv holds. We do not believe Ukraine will refrain from new strikes merely because Trump wants lower diesel prices. Thus, geopolitics is not improving over time, but it is also not worsening — and so it cannot be the explanation for yet another round of US dollar strength.
The average volatility of the EUR/USD currency pair over the last 5 trading days as of October 13 is 68 pips and is characterized as "average". We expect the pair to move between the levels 1.1106 and 1.1242 on Tuesday. The higher linear regression channel has turned down, indicating another trend change. The CCI indicator entered the oversold area three times and formed three "bullish" divergences, warning that the illogical downtrend may be ending. However, the market is not reacting to technical signals.
S1 – 1.1169
S2 – 1.1108
R1 – 1.1230
R2 – 1.1292
R3 – 1.1353
EUR/USD continues to move lower, but we still view the decline as a correction before a new uptrend. The global fundamental backdrop for the dollar remains negative, but in 2026, geopolitics, followed by the Fed's "hawkish" stance, provided strong support for the US currency. With price below the moving average, shorts are possible, with targets at 1.1108 and 1.1106. Above the moving average, long positions are relevant, with targets at 1.1353 and 1.1414.
*এখানে পোস্ট করা মার্কেট বিশ্লেষণ আপনার সচেতনতা বৃদ্ধির জন্য প্রদান করা হয়, ট্রেড করার নির্দেশনা প্রদানের জন্য প্রদান করা হয় না।
ইন্সটাফরেক্স বিশ্লেষণমূলক পর্যালোচনাগুলো আপনাকে মার্কেট প্রবণতা সম্পর্কে পুরোপুরি সচেতন করবে! ইন্সটাফরেক্সের একজন গ্রাহক হওয়ায়, দক্ষ ট্রেডিং এর জন্য আপনাকে অনেক সেবা বিনামূল্যে প্রদান করা হয়।
