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25.09.202619:20 Forex Analysis & Reviews: EUR/USD – Smart Money Analysis: The Euro Remains Under Pressure

Relevance up to 15:00 2026-09-26 UTC+00

Exchange Rates 25.09.2026 analysis

The EUR/USD pair had been falling for eleven consecutive sessions. During this period, the European currency lost 280 points. The losing streak for the European currency began the week before last as the market prepared for an increase in the FOMC policy rate. Since then, the market has continued to buy the dollar on the basis of the Fed's hawkish stance on monetary policy, which is confirmed daily by FOMC members. Interestingly, many Fed policymakers openly state that further monetary tightening is necessary, but at the same time, they do not say how much the interest rate could be raised. The dollar is currently rising as if the Fed had shifted from an absolutely neutral stance to an "ultra-hawkish" one. In reality, however, the interest rate may be raised only one more time, while the easing cycle could begin in 2027. If the Fed plans another tightening and all 12 voting FOMC members say so in interviews, this is essentially the same as the Fed raising the rate once without anyone saying so. In other words, there are no guarantees of several rounds of rate hikes.

Nothing can stop the decline of the European currency at present. Neither tighter ECB policy, nor positive economic data from the European Union, nor the technical picture and "bullish" patterns. Imbalance 19 has been invalidated, so the European currency now has every chance of falling below the psychological level of $1.10. And the "bullish" Imbalance 19 is now not simply invalidated; it has turned into a "bearish" inverted imbalance. It is now a "bearish" pattern alongside Imbalance 23. Thus, traders currently have two areas of interest for short trades. The bulls have only the proximity of the last two swing lows in their favor, from which liquidity could be taken.

Last week, the FOMC indicated its readiness to continue tightening monetary policy, which was enough to trigger a large-scale bearish advance. Even after the Fed tightened monetary policy in September and potentially tightens it again in November or December, I do not see what other factors could force traders to continue buying the US currency. The dollar has indeed performed very well over the past few weeks, but what factors have supported it during this period? FOMC monetary tightening and nothing else?

Overall, in my view, the information backdrop continues to favor the bulls. Despite the Fed's more hawkish monetary policy stance, this is not the only factor that determines exchange rates. I would like to remind you that US bond yields are hitting record highs, creating a huge burden on the budget; the US economy has been slowing over the past few quarters; in 2026, Donald Trump resumed his trade and non-trade disputes with many countries around the world; and the US stock market continues to raise serious concerns because of uncontrolled credit-fueled investment in technology companies involved in AI development.

The current technical picture points to the continuation of bearish momentum. Despite the highly contradictory price movement over the past three weeks, traders now have at least two areas of interest for short trades. The bulls can only hope for the lows of July 28 and June 24, from which liquidity could be taken, potentially triggering a bullish advance.

The economic backdrop on Friday was rather weak and once again failed to interest traders. The most important report on US durable goods orders came in slightly above forecasts, so the bears could continue their attack today. However, today the pair made a corrective retracement to Imbalance 19, from which it could react and resume its decline next week.

There are still numerous reasons for the bulls to attack in 2026. Structurally and globally, Trump's policy, which led to a significant decline in the dollar last year, has not changed. At present, I do not see any significant factors supporting the US currency despite the FOMC's hawkish stance. Geopolitical factors, which supported demand for the US currency during most of the first half of 2026, are no longer doing so.

US and European Union Economic Calendar:

On September 28, the economic calendar contains no significant events. The economic backdrop will have no impact on market sentiment on Monday.

EUR/USD Forecast and Trading Advice:

In my view, the pair remains in the process of forming a "bullish" trend that paused for an entire year. The information backdrop shifted sharply in favor of the bears six months ago, but the trend itself cannot be considered canceled or complete. In the long term, I would say that the pair is in a range. A range does not invalidate the broader "bullish" trend. Thus, the bulls may resume their advance in 2026, but their only opportunities are the 1.1354 and 1.1325 lows, from which liquidity could be taken. The bears currently have Imbalances 19 and 23, from which new short positions can be opened. However, in my view, the current move is risky for traders because it lacks clear fundamental justification. The dollar could certainly push EUR/USD below 1.10, but the rationale for such a decline is too contradictory.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Samir Klishi,
Analytical expert of InstaSpot
© 2007-2026
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