Euro (1.1259) Tests 1.1293 Resistance After Bouncing From a 17-Month Low — Upside to 1.1350

EUR/USD is trading at 1.1259, up 38 pips, or 0.34%, on the day. Friday’s range runs from 1.1212 to 1.1273. The pair opened at 1.1222, just above Thursday’s close of 1.1221. The session high of 1.1273 is the strongest level since the start of October.

This is the second day of a sharp rebound. On Wednesday, October 14, EUR/USD fell to 1.1113, its lowest level in 17 months, after the U.S. September CPI report pushed Treasury yields higher and drove the dollar index to an 18-month high near 103. Since then, the pair has gained 160 pips at the high, or 1.44%, and is now 146 pips above the low.

The pair is on track for its first weekly gain in more than a month. Over five sessions, EUR/USD is up 0.48%. That ends a stretch in which the euro fell for five straight weeks through October 9 and lost 2% from late September.

The longer-term numbers are still weak. EUR/USD is down 2.42% over a month, 4.66% over six months, 4.16% year to date and 3.33% over 12 months. The 52-week range is 1.1114 to 1.2024. At 1.1259 the pair is 1.3% above the 52-week low and 6.4% below the 52-week high.

The move is mainly a dollar story. The dollar index is down 0.35% at 101.69, after testing 101.80 earlier in the morning. GBP/USD is up 0.69% to 1.3366, outperforming the euro. EUR/GBP has dropped 0.34% to 0.8421. AUD/USD is up 0.52% to 0.6959, and USD/JPY has slipped to 157.79. The dollar is weaker against every major currency, and the euro is gaining less than sterling or the Australian dollar.

That relative weakness is the central point of this forecast. The euro is rising because the dollar is falling, not because investors are buying euro-area assets. French sovereign risk, an ECB that is reluctant to commit to more hikes, and an energy shock hitting Europe harder than the U.S. are all holding the euro back.

The level that matters now is 1.1293, the 21-day moving average. EUR/USD has not closed above that line since early October. Friday’s 1.1273 high stalled 20 pips short of it. The 20-day exponential moving average sits close by at 1.1287. These two averages form the first real ceiling for the rebound.

The setup is clear: a rebound off a 17-month low driven by U.S. yields, now testing short-term resistance, with European risks still in place. The next sections lay out what could push EUR/USD through 1.1293 and what could send it back toward 1.1113.

U.S. Yields Drove the Bounce: 10-Year From 5.33% to 5.09%

U.S. Treasury yields are the main driver of EUR/USD this week. Higher U.S. yields pull money into dollar assets, and lower yields push it back out. The euro’s slide to 1.1113 and its recovery since then track the 10-year yield closely.

After Wednesday’s CPI report, the 10-year Treasury yield jumped to 5.33%. September consumer prices rose 0.6% in the month and 3.7% over 12 months, above the 3.6% forecast. Core CPI rose 0.3%, against a 0.2% forecast. Markets raised the odds of another Fed rate hike, and the dollar hit an 18-month high. That was the day EUR/USD fell to 1.1113.

The reversal came Thursday. The September producer price index rose 1.3% month over month and 6.3% year over year, but yields fell anyway. Investors moved into Treasuries as AI-related debt fears spread through equity and credit markets. CoreWeave’s 2031 bonds yielded 15.78% on more than $50 billion of debt, and the selloff in AI-linked stocks pushed money into government bonds. The 10-year yield fell 10 basis points to 5.09%, a three-week low.

On Friday the 10-year is at 5.09%, after touching 5.125% following today’s data. September U.S. import prices rose 1.1% for the month, above the 0.8% forecast, and are up 8.1% over a year. Export prices jumped 2.2%, against a 1.0% forecast, and are up 11.6% over a year. Industrial production rose 0.7%, above the 0.4% forecast, and capacity utilization reached 76.9%, against a 76.5% forecast. The data is hot, but yields barely moved. The bond market has absorbed the inflation news for now.

The yield gap between the U.S. and Germany shows why EUR/USD remains under pressure. The German 10-year Bund yields 3.39%. With the U.S. 10-year at 5.09%, the spread is 170 basis points in favor of the dollar. As long as that gap stays this wide, investors earn significantly more holding dollar assets, and the euro struggles to rally far.

Short-term rates tell the same story. The Fed’s target range is 3.75% to 4.00% after its September hike. The ECB’s deposit rate is 2.50%. That leaves a gap of 125 to 150 basis points at the policy-rate level.

The key point for the forecast is that EUR/USD now depends on whether U.S. yields keep falling. A move in the 10-year toward 5.00% would give the euro more room to rise. A return toward 5.20% to 5.33% would send the pair back toward its lows. The euro has little ability to rally on its own while U.S. rates remain this high.

Warsh’s Neutral Stance Removed the Fed Premium

The Federal Reserve’s tone on Friday was the second reason for the dollar’s slide. Fed Chair Kevin Warsh appeared at a fireside chat with IMF Managing Director Kristalina Georgieva at the IMF–World Bank Annual Meetings in Bangkok. He gave no signal on the October decision.

Warsh said economic conditions since the September meeting had “broadly conformed to our expectations.” On the October meeting, he said: “I don’t prejudge meetings.” On forward guidance, he went further: “We’re not in that business anymore.”

Markets had been bracing for a hawkish message after the hot CPI and PPI reports. Warsh did not provide one. The dollar index fell to its lowest level in almost two weeks, and EUR/USD climbed toward 1.1250 in the European morning. Markets now price an 85% probability that the Fed will leave rates unchanged on October 28.

That marks a sharp shift from Wednesday. The CPI data had roughly doubled bets on an October hike. After PPI, Warsh’s comments and Thursday’s yield drop, those bets have largely disappeared. Other Fed officials had already pointed toward a hold. Vice Chair Philip Jefferson, New York Fed President John Williams and Governor Christopher Waller all signaled patience. Waller noted that rate increases do not have to come at consecutive meetings.

Warsh’s remarks came just before the Fed’s pre-meeting blackout period. No more official guidance will come before the decision on October 28. That leaves markets reacting to data and yields for the next 12 days.

The Fed’s hold expectation helps EUR/USD in the short run, but it does not change the larger picture. The Fed raised rates in September, its first hike since 2023, and December remains a live option. With inflation at 3.7% on CPI and 6.3% on PPI, the risk of a December hike keeps a floor under the dollar.

Warsh also called the AI investment boom “probably the most important thing that’s happening in the global economy on the upside.” He has linked part of the rise in long-term yields to large technology firms competing for capital. That matters for EUR/USD. If AI firms keep borrowing heavily, U.S. yields stay elevated and support the dollar. If AI credit stress pushes money into Treasuries, as it did Thursday, yields fall and the euro benefits.

The market is now pricing a Fed on hold through October. That removed the dollar’s short-term premium and gave EUR/USD room to bounce. The next move depends on whether the Fed signals a December hike and whether European risks ease or worsen.

Eurozone Inflation Confirmed at 3.8%: The Highest Since September 2023

Final eurozone inflation data released Friday confirmed the energy shock hitting Europe. Annual HICP inflation was 3.8% in September, up from 3.2% in August and matching the flash estimate published on October 2. It is the highest rate since September 2023. A year earlier, in September 2025, eurozone inflation stood at 2.2%.

Month over month, prices rose 0.6%. Core inflation, which excludes energy, food, alcohol and tobacco, rose to 2.5% from 2.4%. Energy prices jumped 18.9% year over year, the largest increase of any component. Food, alcohol and tobacco inflation rose to 1.3% from 1.1%.

Energy contributed 1.71 percentage points to the annual inflation rate. Services added 1.52 points. Industrial goods excluding energy added 0.29 points, and food, alcohol and tobacco added 0.25 points.

The country breakdown shows how widespread the increase is. Germany’s rate rose to 3.3% from 2.9%. France climbed to 3.4% from 2.6%. Italy jumped to 4.2% from 3.2%. Spain reached 5.0% from 4.6%. The Netherlands rose to 3.0% from 2.8%. Greece hit 5.1%, 1.3 points above the eurozone average. Inflation rose in 23 EU member states, held steady in three and fell only in Slovakia.

For EUR/USD, the inflation data creates a policy dilemma. Inflation at 3.8% is far above the ECB’s 2% target and argues for more rate hikes. But the shock is driven by energy, which Europe imports. Higher energy prices act as a tax on European consumers and businesses. They push inflation up while slowing growth. That combination makes the ECB cautious about raising rates too far.

The U.S. faces a smaller version of the same shock. U.S. CPI is at 3.7%, close to the eurozone’s 3.8%. But the U.S. is a net energy exporter. Higher oil prices boost U.S. producers’ income and export values, as today’s 11.6% annual rise in export prices shows. Europe pays the higher bill. That difference in exposure is one reason the dollar has outperformed the euro since the Middle East conflict escalated.

Brent crude is at $105.36, down 56 cents, and WTI is at $95.63, down 87 cents. The International Energy Agency is releasing the last 100 million barrels from its March emergency agreement. The U.S. is considering easing sanctions on shadow-fleet tankers. Lower oil prices would ease Europe’s inflation burden and support the euro more than the dollar.

The inflation data confirms that the ECB is under pressure to hike again. The question for EUR/USD is whether the ECB acts as aggressively as markets expect or follows Lagarde’s guidance of a measured response.

The ECB on October 29: A Measured Response, Not a Rate Race

The ECB meets on October 29, one day after the Fed. Its approach so far has been cautious, and that caution limits how far the euro can rise on interest-rate expectations.

The ECB raised its deposit rate from 2.00% to 2.50% through two hikes, in June and September. At the September 10 press conference, President Christine Lagarde said the conflict in the Middle East “continues to generate inflation pressures, and inflation is set to remain well above target for an extended period.” She said the ECB would follow “a data-dependent and meeting-by-meeting approach.”

The ECB’s September staff projections see headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. Core inflation is projected at 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028. The projection for 2026 was unchanged from June, while 2027 and 2028 were revised up. Headline inflation is expected to fall from 3.6% in the fourth quarter of 2026 to 1.9% in the fourth quarter of 2027.

Lagarde has signaled restraint. On September 28 she told the European Parliament that the ECB sees “higher inflation ahead but no signs yet that it is becoming embedded.” She said the shock is “too large to look through,” but a “measured response” is appropriate. ECB chief economist Philip Lane said on October 5 that the bank remains on a “middle path,” calling it prudent to have raised rates from 2.00% to 2.50% over two projection rounds.

That language points to the ECB skipping October and hiking again in December, when new projections are released. Markets have priced up to three more ECB hikes, more aggressive than the bank’s own guidance suggests. If the ECB holds on October 29 and repeats its measured-response message, rate expectations could fall back, which would weigh on the euro.

The ECB is also unlikely to step in on the French bond market while inflation is at 3.8%. Buying bonds to narrow spreads would ease financial conditions at a time when the bank is trying to tighten them. Policymakers have suggested they would only intervene if market moves became disorderly.

The timing creates a two-day risk window. On October 28, the Fed decides. On October 29, the ECB decides. A Fed hold followed by an ECB hike would be the most bullish combination for EUR/USD. A Fed hold followed by an ECB hold is the base case and would leave the pair range-bound. A Fed hike followed by an ECB hold would be the most bearish outcome.

For the forecast, the ECB is unlikely to drive a euro rally. The policy-rate gap of 125 to 150 basis points will stay in place through October. Any sustained EUR/USD gains will have to come from U.S. yields falling, not from ECB tightening.

France: The 135-Basis-Point Spread Weighing on the Euro

French sovereign risk is the euro’s biggest homegrown problem. The 10-year French government bond, or OAT, yields 4.74%. The German Bund yields 3.39%. The spread between them was 135.2 basis points on October 15, down 0.3 basis points on the day.

That spread is elevated. On October 2, it briefly widened above 150 basis points, the widest since the 2011–2012 eurozone debt crisis. EUR/USD fell to a 17-month low the same week. During the week of October 5 to 9, the spread stayed above 140 basis points. It has eased since, but at 135 basis points it is still far above normal levels.

France’s spread is now wider than Italy’s or Greece’s. That reversal reflects the market’s view of France’s fiscal path. Public debt reached €3,595.5 billion at the end of the second quarter of 2026, or 119.0% of GDP, up from 117.5% in the first quarter. The Finance Ministry projects debt rising to 121.7% of GDP in 2027. Annual interest costs are approaching €91 billion.

On October 1, the French government unveiled a €43 billion austerity package targeting a reduction in the deficit from 5.4% to 5.0% of GDP in 2027. Markets did not see that as enough. The spread widened after the budget was presented. Political risk adds to the concern, with a third straight year of budget conflict raising the possibility of another government collapse.

Lagarde addressed France directly in Bangkok on Wednesday. “The primary and first solution lies at home in France,” she said, adding that the problem “has to do with fiscal policies.” That was a clear signal that the ECB will not rescue French bonds while inflation is high. For euro bulls, it means the spread will keep acting as a risk premium on the currency.

The contagion risk extends beyond France. Pressure has started to spread to Italy and Greece. European bank stocks have come under pressure as French bonds sold off. The two-year French-German spread is narrower, at 65 basis points as of October 2, which shows that markets see the risk as long-term rather than an immediate solvency issue.

For EUR/USD, the French spread acts as a ceiling. Each time the dollar weakens, French risk limits how far the euro can rise. Upside for the pair is limited while the OAT-Bund spread stays above 130 basis points. A drop toward 100 basis points would remove a major drag. A return above 150 basis points would push EUR/USD back toward 1.1113 regardless of what U.S. yields do.

The French spread is the indicator to watch alongside U.S. yields. Together, they set the range for EUR/USD.

The Technical Map: 1.1113 Floor, 1.1293 Ceiling

The technical picture shows a sharp rebound inside a broader downtrend. The bearish trend is still in place, but the strength of the bounce from 1.1113 suggests the pair is set for a corrective move higher.

The 17-month low at 1.1113 on October 14 is the key support. It matches the 52-week low of 1.1114. Before that, the October 5 low near 1.1160 marked the pair’s lowest level since May 2025. Both levels now form a support zone between 1.1113 and 1.1160.

Momentum had reached an extreme before the bounce. On October 13, the 14-day RSI was at 18.07, a deeply oversold reading. The pair was trading below its lower Bollinger Band at 1.12490, with the middle band at 1.14778 and the upper band at 1.17065. When a currency pair falls this far below its lower band, a sharp bounce often follows. That is what happened from 1.1113.

The first resistance zone is 1.1240 to 1.1273. Thursday’s high was 1.1240, and Friday’s high is 1.1273. EUR/USD has now broken above Thursday’s high but has not cleared 1.1273.

The key resistance is 1.1287 to 1.1293. The 20-day exponential moving average is at 1.1287 and the 21-day simple moving average is at 1.1293. The October 2 high at 1.1290 sits in the same zone. Three separate levels within six pips make this the most important ceiling on the chart. A daily close above 1.1293 would be the first sign that the downtrend is turning.

Above that, resistance is at 1.1325 to 1.1350, a former major support zone that has turned into resistance. Then comes 1.1362 and 1.14. A move back above 1.14 looks difficult while the French spread and U.S. yields remain at current levels.

On the downside, the first support is 1.1212, today’s low. Below that is 1.1190, an intraday low earlier in the session. The 1.1160 to 1.1113 zone follows. A daily close below 1.1113 would open the way to 1.1080, a key structural support, and then the 1.10 handle.

The near-term trading range most consistent with these levels is 1.1160 to 1.1280. That range is likely to hold over the next one to three weeks unless the Fed or ECB surprises.

For the forecast, the chart says the bounce has more room, but the 1.1287 to 1.1293 zone is the test. A failure there would send EUR/USD back toward 1.1190 and 1.1160. A daily close above 1.1293 would target 1.1325 to 1.1350.

Sterling Outperforms: What EUR/GBP at 0.8421 Says About the Euro

The euro’s weakness shows up clearly in its performance against other currencies. EUR/USD is up 0.34% on Friday, but GBP/USD is up 0.69% to 1.3366. Against the pound, the euro is down 0.34%, with EUR/GBP at 0.8421.

When the dollar weakens, the euro typically rises against it. But it is rising less than sterling, the Australian dollar or the New Zealand dollar. That pattern points to euro-specific problems weighing on the currency even as the dollar softens.

EUR/GBP below 0.8455 on a weekly close is an important technical signal for sterling strength. At 0.8421 the pair is already below that level. A weekly close here would confirm sterling’s outperformance and suggest that capital is moving from euro assets into U.K. assets, not just into the dollar.

The pound is benefiting from a different backdrop. The Bank of England’s policy rate is 3.75%, well above the ECB’s 2.50%. U.K. growth has held up, and Bank of England Governor Andrew Bailey offered support for sterling at the Bangkok meetings. Sterling does not carry a sovereign spread problem like France’s.

Against the Swiss franc and the yen, the euro is closer to flat. The franc remains a safe haven, and the yen is weak because of Japan’s low interest rates. USD/JPY is at 157.79, below the 158.00 level it broke after Warsh’s comments. The euro is outperforming the yen slightly while underperforming sterling and the antipodean currencies.

That mixed picture shows the euro sitting in the middle of the G10 currency group. It is not a safe haven like the franc. It does not have the higher interest rates of sterling or the commodity exposure of the Australian dollar. It is held back by energy dependence and French fiscal risk.

For EUR/USD, the relative weakness matters. If the dollar keeps falling, the euro will rise, but not by as much as other currencies. A dollar index drop from 101.69 to 100.50 would likely lift EUR/USD toward 1.1350, while GBP/USD and AUD/USD would gain more.

The EUR/GBP move also offers a signal for the forecast. If EUR/GBP stabilizes and recovers above 0.8455, that would indicate euro-specific pressure is easing. Continued weakness in EUR/GBP would confirm that the euro’s rebound against the dollar is dollar-driven and limited.

Energy and Geopolitics: Brent at $105.36 and the Hormuz Risk

Energy is the biggest structural difference between the euro and the dollar right now. Brent crude is at $105.36 and WTI at $95.63. The roughly $10 gap between them reflects supply risk in the Middle East, where Europe sources more of its energy.

The Strait of Hormuz has seen repeated attacks this month, with more than two dozen incidents recorded since October 1. Ships have caught fire or sunk this week. The Red Sea has seen renewed conflict. President Trump said the U.S. may strike Iran’s nuclear facilities again, including the fortified Pickaxe Mountain site. Each new escalation pushes up European energy costs.

The ECB traces most of its inflation problem to this energy shock. Eurozone energy inflation is 18.9%. In August, energy inflation was 14.3%. The ECB’s two rate hikes this year were a direct response to the conflict’s effect on prices.

For EUR/USD, higher oil prices are a negative. Europe imports most of its energy, so higher oil and gas prices send money out of the eurozone and weaken its trade balance. The U.S. exports energy, so higher prices bring money in. Today’s U.S. export price data shows this effect, with export prices up 11.6% over a year.

That is why the euro has fallen even as the ECB raised rates. Higher rates normally support a currency. But when the rate hikes are a response to an imported energy shock that hurts growth, they offer less support. The euro fell 2% from late September to its October 14 low, despite two ECB hikes this year.

Relief on energy prices would help the euro. The IEA’s release of the last 100 million barrels from its March agreement, and possible U.S. easing of shadow-fleet sanctions, could pull crude lower. A drop in Brent below $100 would ease European inflation and improve the eurozone’s trade position. That would be one of the strongest positives for EUR/USD.

A new escalation would hurt the euro. A U.S. strike on Iran or a major Hormuz disruption that pushes Brent toward $115 would raise European energy costs sharply. That would send EUR/USD back toward 1.1113 and possibly 1.10, regardless of U.S. yields.

Energy and geopolitics set the risk around the forecast. The euro’s direction depends on Brent as much as on Treasury yields or the ECB.

Seasonality, Positioning and the Weekly Close

The setup going into the weekly close favors the bounce continuing, but with limits.

EUR/USD has posted five straight weekly declines through October 9 and lost 2% from late September. A weekly close above 1.1250 would be the first weekly gain in more than a month. Breaking a five-week losing streak often shifts sentiment, with short positions covering and the pair moving higher in the following week.

Positioning helps the bounce. After the slide to 1.1113, short euro positions built up quickly. The 14-day RSI at 18.07 on October 13 shows how stretched the selling had become. Some of those shorts were covered as yields fell Thursday and Warsh stayed neutral on Friday. More could follow if EUR/USD clears 1.1293.

Dollar positioning is also stretched. The dollar index reached an 18-month high near 103 on Wednesday. It is now on track for its first weekly decline in five weeks, at 101.69. A dollar that has been bought heavily for five weeks is vulnerable to a pullback when the Fed signals patience.

But the euro’s own drivers have not improved. The French spread is still at 135 basis points. Eurozone inflation is at 3.8%. The ECB is expected to hold in October. Energy prices are high. Those factors explain why the euro is lagging sterling and the Australian dollar on Friday.

The weekly close will set up next week. A close above 1.1250 would confirm the first weekly gain in over a month and point to a test of 1.1293 early next week. A close above 1.1293 would be a stronger signal and target 1.1325 to 1.1350. A close below 1.1212 would mean the rebound has stalled and leave 1.1160 in play.

Next week’s calendar is lighter for the eurozone. The main U.S. events are housing data on Tuesday, October 20, and Big Tech earnings from Tesla, Meta and Netflix on October 20 and 21. Those earnings will drive the AI credit story and, through it, U.S. Treasury yields. Weaker results that deepen AI credit worries would push yields lower and support EUR/USD.

The forecast depends on how the pair handles the 1.1287 to 1.1293 zone in the next five sessions. Positioning and dollar fatigue give the bounce some fuel. The French spread and energy costs limit how far it can go.

Scenarios Into the Fed and ECB Decisions (October 28–29)

The back-to-back central bank meetings on October 28 and 29 are the main catalysts for EUR/USD. Each scenario depends on U.S. yields, the French spread and energy prices.

Base case: break above 1.1293 toward 1.1350 (50% probability). The Fed holds on October 28 as markets expect. The U.S. 10-year yield drifts between 5.00% and 5.10%. The dollar index stays below 102. The French spread holds near 130 to 135 basis points. EUR/USD closes above the 1.1287 to 1.1293 resistance zone and moves toward 1.1325 to 1.1350, a former support zone that is now resistance. The ECB holds on October 29 with a hawkish message about December, which keeps rate expectations steady. A move to 1.1350 from 1.1259 is a 91-pip gain, or 0.81%.

Bull case: 1.14 and above (15% probability). AI credit stress spreads, pushing the U.S. 10-year below 5.00%. The French spread narrows toward 100 basis points after progress on the budget. Brent falls below $100 as the IEA release and sanctions changes take effect. The Fed holds with a dovish tone, and the ECB signals a December hike. EUR/USD clears 1.1350 and 1.1362 and tests 1.14. A move above 1.14 would be difficult in the current environment.

Bear case: back to 1.1113 and below (35% probability). The U.S. 10-year rebounds toward 5.20% to 5.33%. Fed pricing shifts back toward a December hike. The French spread widens above 150 basis points as budget talks stall or the government faces collapse. Brent jumps above $110 on a strike on Iran or a Hormuz disruption. EUR/USD fails at 1.1293, drops through 1.1212 and 1.1190 and retests 1.1113. A daily close below 1.1113 opens 1.1080 and 1.10.

Several events can shift these odds before the meetings. U.S. housing data on October 20 will show how 7.5% mortgage rates are affecting the economy. Big Tech earnings will drive the AI credit story. French budget developments will move the OAT-Bund spread. Middle East headlines will move Brent.

The probabilities lean toward the base case. U.S. yields have peaked for now, the Fed is on hold, and positioning favors a further bounce. The bear case carries more weight than usual because of French risk and the energy shock.

EUR/USD Forecast Verdict: Hold 1.1190, Break 1.1293, Target 1.1350

EUR/USD is at 1.1259, 146 pips above its 17-month low of 1.1113 and testing short-term resistance. The setup favors further gains in the short term, but the euro’s own problems limit how far it can go.

The case for a higher EUR/USD rests on four points. First, U.S. yields have fallen, with the 10-year down from 5.33% after CPI to 5.09%. Second, the Fed is on hold, with markets pricing an 85% probability of no change on October 28 after Warsh declined to signal a hike. Third, the dollar index is down 0.35% at 101.69 and heading for its first weekly decline in five weeks. Fourth, the 14-day RSI hit 18.07 on October 13, a deeply oversold reading, and the pair has rebounded 160 pips from the low.

The case against a sustained rally rests on four points. The French OAT-Bund spread is at 135.2 basis points, near its widest since the 2011–2012 debt crisis. The ECB is expected to hold on October 29 and has signaled a measured response rather than a rate race. Eurozone inflation is at 3.8%, driven by an 18.9% rise in energy prices, which hurts the eurozone more than the U.S. And the euro is underperforming sterling, with EUR/GBP down 0.34% to 0.8421, showing that the bounce is mostly dollar-driven.

The 1.1287 to 1.1293 zone is the decisive level. A daily close above it, where the 20-day EMA, the 21-day SMA and the October 2 high converge, would confirm a short-term trend change and open the way to 1.1325 to 1.1350. A failure there would send EUR/USD back toward 1.1190 and 1.1160.

The forecast is a break above 1.1293 targeting 1.1350 into the October 28–29 central bank meetings, a 91-pip gain from the current price. The triggers are a weekly close above 1.1250, a daily close above 1.1293 and a 10-year Treasury yield holding below 5.10%. The invalidation level is a daily close below 1.1190, which would shift the outlook back to the 1.1113 low.

The risk-reward is moderately favorable. From 1.1259, the distance to the 1.1190 invalidation level is 69 pips and the distance to the 1.1350 target is 91 pips, a ratio of 1.3 to 1. That is not a strong edge, which reflects the euro’s weak fundamentals.

The verdict is cautiously bullish in the short term: hold 1.1190, break 1.1293, target 1.1350. Above 1.1350, the French spread and the energy shock make further gains much harder. A move toward 1.14 would require a significant drop in U.S. yields and a clear improvement in France’s fiscal outlook.

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