EUR/USD Price Forecast - EURO to Dollar Holds 1.1748 as Shutdown and Labor Weakness Pressure Dollar, Eurozone Inflation Stays Firm

EUR/USD Holds 1.1748 as Shutdown and Weak Jobs Data Keep Dollar Under Pressure

The EUR/USD pair is trading at 1.1748 after volatile swings tied to a mix of political shocks in Washington and weaker-than-expected U.S. labor data. The U.S. government officially shut down at midnight after Congress failed to pass a funding bill, leaving federal workers furloughed and raising the risk of delayed economic data releases. This political paralysis pressured the dollar broadly, allowing the euro to consolidate above the 1.1710 support zone despite intraday dips to 1.1720.

Labor Market Weakness Shifts Fed Policy Expectations

The ADP Employment Change report showed a 32,000 private-sector job loss in September, a major disappointment versus the 50,000 increase expected and far worse than the August revision, which dropped from a gain of 54,000 to a loss of 3,000. The soft labor market print triggered an immediate reaction in EUR/USD, with the pair spiking from its low near 1.1720 back toward the 1.1750 handle. The weak labor picture adds to speculation the Federal Reserve may have to accelerate its easing cycle, further undermining the dollar.

Eurozone Inflation Stays Firm as ECB Holds Steady

Across the Atlantic, the preliminary September Harmonized Index of Consumer Prices (HICP) in the Eurozone rose 2.2% year-on-year, while Germany’s CPI jumped to 2.4% from 2.2% in August. Core HICP remained steady at 2.3%. These figures confirm inflation remains sticky in Europe, reinforcing the European Central Bank’s decision to keep policy restrictive for now. Still, the euro failed to gain sustained momentum from the data, showing investors remain more focused on U.S. developments.

ISM Manufacturing PMI Expected to Improve Slightly but Stay in Contraction

Later in the session, attention shifts to the ISM Manufacturing PMI, expected at 49 for September versus 48.7 in August. A reading below 50 would still reflect contraction, but any upside surprise could limit the dollar’s losses. Traders are watching whether the shutdown and deteriorating labor conditions weigh further on business confidence, potentially locking the U.S. economy into a soft patch as Q4 begins.

Technical Picture: Resistance at 1.1780 Caps Upside Momentum

Technically, EUR/USD set an intraday high at 1.1778, just below the critical resistance at 1.1780. A break above this zone would expose 1.1830 and 1.1880 as the next upside targets, potentially opening the door to a retest of the late-September highs near 1.1820. On the downside, immediate support lies at 1.1710–1.1715, followed by 1.1685 and 1.1650. Longer-term moving averages remain supportive, with the 100-day and 200-day SMAs trending higher well below current levels, keeping the risk skewed to the upside.

Market Sentiment and Seasonal Bias Favor EUR/USD Bulls

Seasonality also plays a role. October has historically been modestly bullish for the euro, with average monthly returns near +0.30% over the past five decades. After reaching a four-year high around 1.1900 in September before easing, the euro remains in position to regain momentum if U.S. data continues to underperform and the Fed moves closer to another rate cut.

Key Takeaway: EUR/USD Supported by Dollar Weakness, But Resistance Looms

The combination of a U.S. shutdown, worsening labor data, and still-firm Eurozone inflation sets the stage for EUR/USD to probe higher levels in October. Resistance at 1.1780–1.1830 remains pivotal, while the 1.1710 floor underpins near-term support. Traders will closely watch Friday’s Nonfarm Payrolls—if released despite the shutdown—for confirmation of the ADP weakness.

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