EUR/USD Price Forecast - Euro to Dollar Steadies at 1.1740 as Shutdown Freezes U.S. Data and Fed Cut Bets Surge

EUR/USD Holds 1.1740 as Shutdown Stalls U.S. Data and Investors Eye ECB Clues

The EUR/USD pair is trading around 1.1740 after several sessions of compressed volatility. The four-day rally that briefly lifted the euro to 1.1755 has stalled, reflecting a balance between dollar weakness tied to the U.S. government shutdown and softer European fundamentals. Wall Street’s gains and the dollar’s intraday rebound pulled the pair off its highs, but the euro remains resilient above 1.1710 support, consolidating near levels last seen in mid-September.

Government Shutdown Freezes U.S. Data, Fed Rate-Cut Bets Surge

The U.S. political standoff has shuttered federal agencies and blocked the release of critical labor data including September nonfarm payrolls, leaving markets without the Fed’s most important input ahead of its October 29 meeting. The shutdown is already costing $400 million daily in lost wages for 750,000 furloughed workers, compounding political dysfunction at a delicate economic moment.

With data blackouts, traders are leaning heavily on private surveys. The ADP Employment Report showed a loss of 32,000 private jobs in September, the steepest decline since March 2023, while August was revised down to -3,000 from an initially reported +54,000. That weakness pushed Fed cut bets higher: markets now price a 99% probability of a 25 bp cut in October and an 86% chance of another in December, according to CME’s FedWatch.

Eurozone Macro Weakness: Rising Unemployment, Mixed Inflation Picture

Across the euro area, data has been far from encouraging. The Eurozone unemployment rate climbed to 6.3% in August from 6.2%, overshooting expectations of stability. Inflation surprised mildly higher: the September Harmonized Index of Consumer Prices (HICP) advanced to 2.2% YoY, while core inflation held at 2.3%, suggesting lingering price stickiness even as growth momentum fades.

The ECB has stuck with its “meeting-by-meeting” guidance. President Christine Lagarde called current policy “in a good place,” while Governing Council members emphasized flexibility given balanced risks. For now, markets see the ECB on hold into 2026, with policy only shifting if inflation reaccelerates or growth deteriorates further.

U.S. Dollar Index Stalls, Technical Levels Define EUR/USD Range

The U.S. Dollar Index (DXY) is oscillating near 97.70–97.75, failing to mount a decisive rebound despite the shutdown. Technicals show DXY capped by the 50-day EMA at 97.79 and the 200-day EMA at 97.73, with RSI at 44 signaling waning momentum. For EUR/USD, the range is defined:

• Resistance: 1.1770–1.1780, a zone tested repeatedly but not broken. Clearing it opens 1.1820 and 1.1880.

• Support: 1.1710–1.1700, reinforced by the 200-period SMA and Fibonacci retracements. A break would expose 1.1650 and 1.1615.

The daily chart shows EUR/USD stuck under a flat 20-SMA while holding above a mildly bullish 100-SMA near 1.1600. On the 4-hour chart, RSI sits near 51 and momentum is subdued, suggesting markets await a trigger.

Speculative Positioning and Investor Flows

CFTC data shows net euro longs trimming to 114,000 contracts, their lowest since July, while shorts narrowed to 165,000 contracts. Open interest climbed to a two-week high of 859,000, showing traders are engaged but cautious. ETF flows into euro-based assets have slowed, reflecting hesitation to bet aggressively on the common currency until the U.S. shutdown resolves or clearer ECB signals emerge.

Trade Tensions Add to Macro Overhang

The backdrop of trade remains a wild card. Washington maintains a 30% tariff on Chinese imports, while Beijing keeps 10% duties on American goods. A truce delayed further escalation, but auto tariffs remain unresolved, keeping pressure on European car exporters. Meanwhile, a U.S.–EU compromise reduced some industrial tariffs, but not enough to shift the trade balance. For EUR/USD, these tensions limit upside as European exporters risk margin compression if demand softens further.

Short-Term Scenarios for EUR/USD

If EUR/USD breaks above 1.1770–1.1780, momentum could accelerate to 1.1820 and test the September ceiling near 1.1918, with 1.2000 as the psychological extension. A failure at resistance keeps the pair capped, with downside risks reopening toward 1.1710 and the summer lows around 1.1645.

Technical momentum indicators remain mixed. RSI at 55 is neutral, MACD is crossing below signal lines, and ADX at 14 reflects weak trend conviction. This suggests EUR/USD is trapped in consolidation until a decisive macro trigger—either a Fed cut, further U.S. data weakness, or a strong eurozone catalyst—unlocks direction.

Verdict on EUR/USD: Buy, Sell, or Hold?

Given the convergence of weak U.S. employment, aggressive Fed cut pricing, and a government shutdown that blinds policymakers, the balance leans bullish for EUR/USD in the short term, with a breakout above 1.1770 likely to trigger momentum toward 1.1820–1.1880. However, rising eurozone unemployment and sticky inflation cap medium-term upside.

The immediate stance: EUR/USD is a Buy above 1.1770 with targets at 1.1820–1.1880, but a Hold within the 1.1710–1.1760 range, as the pair remains vulnerable to political headlines and trade risks.

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