EUR/USD Price Forecast - EURO to Dollar at 1.1719: Fed Cut Bets Surge to 97% While Eurozone Jobless Rate Hits 6.3%

EUR/USD Holds 1.1719 as Shutdown Cuts U.S. Data, ECB Signals Steady Rates

The EUR/USD pair is trading at 1.1719, slightly lower by 0.09% after back-to-back bearish sessions. The U.S. Dollar is firming as the federal shutdown enters its third day, leaving markets without critical economic data such as Nonfarm Payrolls and Initial Jobless Claims. The absence of labor figures forces traders to rely on softer indicators like ISM Services PMI, while Dallas Fed President Lorie Logan’s warning that inflation is trending higher has provided a hawkish counterbalance to rising rate-cut bets. At the same time, markets are assigning a 96–97% probability of a Fed cut on October 29, with another reduction in December priced above 90%. This divergence between hawkish rhetoric and dovish market expectations is a key driver of volatility.

Eurozone Struggles With Weak Data as ECB Maintains Cautious Line

On the European side, the euro is pressured by signs of slower growth. Eurostat confirmed unemployment climbed from 6.2% to 6.3% in August, marking the first uptick in months. Producer Price Index data and HCOB PMI releases are expected later today, and both could reinforce downside pressure if they show further evidence of disinflation or soft demand. ECB policymaker Martins Kazaks stated rates are at a “very appropriate” level, signaling no cuts are imminent, but his cautious tone underscores the central bank’s uncertainty. Investors remain concerned about Germany’s stagnation, with manufacturing readings still in contraction.

Technical Picture: EUR/USD Range and Key Levels

The currency pair has consolidated above 1.1700, which has held as strong support for four consecutive sessions. Resistance remains heavy at 1.1740–1.1750, with a break needed to open a test of 1.1800 and the yearly high at 1.1918. On the downside, failure to defend 1.1700 exposes 1.1650, followed by the 100-day SMA at 1.1610. Momentum indicators show a flat RSI near 50, reflecting indecision as traders weigh shutdown risk against ECB stagnation.

Labor Market Cooling Fuels Fed Cut Bets

The U.S. labor market backdrop is deteriorating. Challenger, Gray & Christmas reported 54,064 job cuts in September, down from 85,979 in August but still reflecting sluggish hiring. Job openings edged up to 7.23 million, yet the hiring rate slid to 3.2%, the weakest since June 2024. With the shutdown delaying official payroll data, the Fed faces policymaking blind spots. Despite Logan’s hawkish remarks, most of the market is convinced easing is imminent, with the CME FedWatch Tool showing a near-certain October cut.

Political Overhang Adds to Dollar Volatility

The U.S. shutdown remains unresolved, with Senate Democrats set to block another short-term GOP funding bill. The Senate is unlikely to convene over the weekend, extending the data blackout into next week. Across Europe, political noise also weighs on sentiment. France’s new Prime Minister Sebastien Lecornu pledged to cut the budget deficit to 4.7% of GDP while ruling out a wealth tax, but his approval rating sits at just 16%. In the Netherlands, elections scheduled for October 29 add further uncertainty. These political risks add layers of volatility for EUR/USD, making 1.1700–1.1750 a highly sensitive short-term battleground.

Macro Comparisons With Other Majors

The euro’s weakness is reflected broadly. Against the Japanese yen, it gained 0.35%, trading at 173.10 EUR/JPY, helped by carry flows, but lost ground against the dollar and Swiss franc. The U.S. Dollar Index (DXY) has recovered from multi-day lows, buoyed by haven demand during the shutdown. Meanwhile, sterling gained modestly, with GBP/USD climbing above 1.3430 as traders viewed the pound as less exposed to U.S. political gridlock.

Buy, Sell, or Hold Verdict on EUR/USD

With EUR/USD hovering at 1.1719, the cross sits in a fragile range defined by political uncertainty in Washington and weakening Eurozone fundamentals. The technical base at 1.1700 is critical, but upside is capped by resistance at 1.1750 unless fresh catalysts emerge. The balance of risks leans bearish: the Fed may cut soon, but the euro faces its own structural weaknesses with rising unemployment and stagnant growth. Given the mix of hawkish Fed language, dovish pricing, and euro underperformance, the stance here is SELL on rallies toward 1.1750, with targets at 1.1650–1.1610 in the coming sessions.

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