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06.10.202612:16 Forex Analysis & Reviews: EUR/USD – Price Analysis and Forecast: Political Uncertainty in the Eurozone's Largest Economies Limits the Euro's Growth

Relevance up to 09:00 2026-10-07 UTC+00

Exchange Rates 06.10.2026 analysis

On Tuesday, the euro is attempting to recover from yesterday's losses, but with limited success, as growing political uncertainty and worsening budget prospects are once again raising concerns about the potential spread of the debt crisis across the region. Data on German factory orders failed to provide significant support for the single currency.

According to data released on Tuesday by the Federal Statistical Office of Germany (Destatis), new orders for German-manufactured goods plunged by 10.6% in August after rising by 3.2% in July. On an annual basis, the volume of orders increased by 2.7%, slowing from a 14% increase in the previous month.

The main reason for these figures in August was a sharp decline in sales in the transport equipment segment (aircraft, ships, trains, and military equipment), which fell by 61% on a seasonally adjusted basis after order volumes in this segment doubled in July. Excluding large orders, sales across the remaining categories of goods declined by only 0.1%.

The euro is also under pressure from growing concerns about government debt and political uncertainty. The difference in yields between French government bonds (OATs) and German government bonds (Bunds) has reached levels not seen since the 2009 financial crisis. France is facing a political deadlock that rules out the adoption of significant spending-cutting measures, at least until the 2027 presidential election.

The situation is further complicated by Spanish Prime Minister Pedro Sanchez's announcement of early elections in November. In addition, instability within Friedrich Merz's government in Germany is creating an atmosphere of political uncertainty that is discouraging investors from holding the euro.

Oil prices are also putting pressure on the currency, despite the fact that oil prices have retreated from their extreme levels, providing some relief for the single currency. On Monday, the price of Brent crude fell below the key $100-per-barrel level, allowing EUR/USD to rise above 1.1200.

Exchange Rates 06.10.2026 analysis
Reports from the Middle East indicate a significant increase in the volume of oil transported through the Strait of Hormuz. However, prices remain more than 25% above their August lows, as the situation surrounding the conflict between the United States and Iran remains uncertain, while the prospects for a peaceful resolution to the conflict remain highly uncertain.

The European Central Bank (ECB) is facing a difficult situation and must carefully balance its monetary policy. Further tightening could trigger increased selling of government bonds. On the other hand, inflation is significantly above the 2% target and is unlikely to decline without a substantial improvement in the situation in the Middle East, adding further uncertainty to the eurozone's economic outlook.

Meanwhile, the US ISM Services PMI data released on Monday showed that business activity growth slowed more sharply than expected in September amid rising business costs and persistently strong demand. Nevertheless, the US dollar continues to receive support from high Treasury yields, which have reached new multi-year highs.

From a technical perspective, the oscillators are negative, confirming the bears' advantage in the market. However, the Relative Strength Index (RSI) is in oversold territory, indicating a potential correction. The 1.1260–1.1286 level represents resistance, while the round 1.1200 level provides support.

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