EUR/USD Price Forecast - Euro to Dollar Holds 1.1740 as German Confidence Crumbles, U.S. GDP Jumps to 3.8%

EUR/USD slips as German sentiment weakens and U.S. data lifts dollar

EUR/USD (1.1740) is trading under pressure after another round of disappointing European indicators and stronger U.S. macro releases. Germany’s GfK Consumer Climate index improved marginally to -22.3 for October, up from -23.5, but remains deeply negative, underscoring persistent cost-of-living strains. The German IFO Business Climate fell to 87.7, missing forecasts of 89.3 and marking the lowest since May. Coupled with mixed PMI readings — services holding but manufacturing contracting more sharply — the euro’s fundamental backdrop remains fragile.

On the other side, U.S. momentum looks firmer. The latest revision put second-quarter GDP at 3.8%, well above consensus of 3.3%, while weekly jobless claims eased to 218K, signaling labor resilience. Fed Chair Jerome Powell stressed the “tough balance” of cutting too soon while inflation remains elevated, but traders still price in a 92% probability of an October rate cut, up from 87% last week. Durable goods orders and the PCE inflation release on Friday (expected 2.9% y/y) will be decisive for direction.

Technical outlook: 1.1710–1.1788 defines the battle zone

EUR/USD has been pinned between a rising trendline and overhead resistance. Current price action at 1.1740 clings to support, with the 100-SMA at 1.1713 reinforcing the floor. Below lies 1.1710, and a break would expose 1.1691 and then 1.1659 as next downside pivots. On the topside, 1.1788 (50-SMA) is the first trigger; clearing it would open targets at 1.1819 and 1.1859, both recent resistance zones.

Momentum indicators point to indecision. The RSI sits at 41, suggesting neither oversold nor overbought conditions, but divergence hints at weakening euro demand. Candlestick patterns — spinning tops and hammers around support — reflect hesitation, not conviction. For traders, the actionable zone sits between 1.1725–1.1740: long entries with stops under 1.1690 remain viable if bullish patterns confirm, while any decisive break through the trendline invalidates the setup.

Dollar demand builds as global yields diverge

The U.S. Dollar Index (DXY) is holding firm around 97.8, bolstered by stronger GDP and expectations that Fed policy won’t ease as aggressively as markets hope. Treasury yields have risen to 4.2% on the 10-year, while German bunds retreated to 2.73%, underscoring a widening transatlantic gap that weighs on the euro. With President Trump reiterating his commitment to defending tariffs while expressing confidence in Ukraine’s war effort, geopolitical stress also favors the dollar as a safe haven.

Market positioning and sentiment split

Banks remain divided: Danske sees EUR/USD sliding further as dollar demand persists, while MUFG and ING argue a grind back toward 1.2000 is possible if the Fed proceeds with cuts into year-end. For now, the structure tilts bearish, with traders selling rallies near 1.1820 and targeting 1.1600 on the downside. Bulls will need confirmation above 1.1788 and especially 1.1830 to shift momentum.

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