Euro Trapped Below 1.1400 as Brent Hits $106.55 — 1.1360 Floor Guards the Path Back to 1.1490

The euro starts the final week of September on the back foot. EUR/USD trades at 1.1377, down 0.13% from the prior session, after spending the Asian and European mornings wavering between a one-month low at 1.1360 and the 1.1400 level. The pair has not held above 1.1400 since last Wednesday, and every rally attempt this morning has faded below that handle.

The damage is cumulative rather than sudden. EUR/USD has lost 0.80% over the past seven sessions, 1.80% over the past month and 3.01% over the past twelve months. The pair touched 1.1490 on September 21, the week's high, then slid through four straight sessions to a low of 1.1368 on September 24. Monday's trade is testing that low again, with the one-month floor at 1.1360 only 17 pips below the current price. The euro now sits at its weakest level since late July.

The daily reference fixings show the trajectory. The pair stood at 1.1541 on September 15, dropped to 1.1463 on September 16, the day the Federal Reserve hiked, recovered to 1.1486 by September 19, then gave it all back: 1.1464 on September 21, 1.1448 on September 22, 1.1384 on September 23 and 1.1381 on September 24. That is a 160-pip decline in two weeks.

The trigger for Monday's pressure is the same shock hitting every asset class. President Trump rejected Iran's proposal to reopen the Strait of Hormuz, Brent crude jumped to $106.55, the 10-year Treasury yield climbed to 5.22%, and fed funds futures now price a 70.3% probability of an October Fed hike. The dollar index is firm at 101.09.

The thesis for this forecast: the euro is losing the policy race and the energy war at the same time. The European Central Bank has hiked twice since the Middle East conflict began, but the Federal Reserve is tightening faster, and the market is pricing more Fed hikes than ECB hikes into year-end. Every oil spike widens that gap, because the eurozone imports its energy while the United States produces it. Rate differentials favor the dollar, and terms of trade favor the dollar. Until one of those two forces reverses, the path of least resistance for EUR/USD points toward 1.1300.

The week ahead carries decisive data on both sides of the Atlantic. The eurozone's flash September inflation estimate arrives Wednesday, the same morning as the US PCE report. Friday brings US payrolls. Those three releases will decide whether 1.1360 holds or breaks.

The Rate Gap: Fed at 3.75%–4.00% Against an ECB Deposit Rate of 2.50%

Currency pairs trade on relative interest rates, and the gap between the Federal Reserve and the European Central Bank is the core reason EUR/USD sits near a two-month low.

The Fed raised rates by 25 basis points on September 16, lifting its target range to 3.75%–4.00%, and signaled more increases could follow. The ECB raised its three key rates by 25 basis points six days earlier, on September 10, taking the deposit facility rate to 2.50%, the main refinancing rate to 2.65% and the marginal lending rate to 2.90%, effective September 16. Measured from the top of the Fed range to the ECB deposit rate, the policy gap stands at 150 basis points.

Both central banks are hiking into an energy shock, but they are not hiking at the same pace. The ECB delivered its first hike since 2023 in June, paused in July, and hiked again in September. The minutes from July stressed that the pause did not mark the end of the tightening cycle. Money markets now price at least one more 25-basis-point ECB hike by year-end, with a 40% probability of a second.

The Fed side is moving faster. Fed funds futures assign a 70.3% probability to an October hike at the meeting on October 28, up from 64.2% one session earlier and 57% a week ago. Some traders are pricing a third increase at the December meeting. If the Fed hikes in October and December while the ECB delivers one move, the policy gap would widen to 175 basis points by year-end.

The long end tells the same story in sharper form. The 10-year Treasury yields 5.22%, while Germany's 10-year Bund sits at 3.624%, virtually unchanged on the session. That is a 160-basis-point spread in favor of dollar assets. The 30-year Treasury at 5.51% sits at its highest level since 2004. A global investor choosing between a 10-year Bund and a 10-year Treasury picks up 160 basis points of extra yield by owning the US bond, and that yield gap pulls capital into dollars.

Rate differentials alone do not set exchange rates, but they set the carry. A trader who is long dollars against euros earns the rate gap every day the position stays open. With the spread at 150 basis points on policy rates and 160 on 10-year yields, the cost of betting on a euro rally is steep. Short euro positions pay the holder; long euro positions cost the holder.

That arithmetic explains why the euro has struggled to hold rallies this month. Only a narrowing of the rate gap, through a softer Fed or a more aggressive ECB, can change the carry math.

Brent at $106.55: Why the Hormuz Shock Hits the Euro Harder Than the Dollar

Energy is the second force pushing EUR/USD lower, and it hits Europe harder than the United States. Brent crude trades at $106.55, up more than 2% from Friday's $104.32 settlement, after the White House rejected Iran's seven-day ceasefire proposal. November WTI jumped 4.24% to $96.33. Iran said it would not soften its conditions for reopening the strait, and mediator talks are expected to resume this week.

The Strait of Hormuz carried one-fifth of the world's crude oil and liquefied natural gas before the conflict began. Brent is up more than 70% this year and on track for a third straight monthly gain. The US-Iran war is in its eighth month.

The currency impact runs through terms of trade. The eurozone is a net energy importer. Every dollar added to the price of a barrel increases the import bill for European economies, drains euros out of the region to pay for dollar-denominated energy, and worsens the current account. The United States is a net energy producer, so higher oil prices leave its trade balance in better shape. An oil shock is a transfer of wealth from energy importers to energy exporters, and the euro sits on the losing side of that transfer.

The inflation data confirms the pressure. Eurozone headline inflation accelerated to 3.3% in August from 2.9% in July, the highest level since September 2023. Energy inflation jumped to 14.3%, its highest since January 2023. Germany's inflation rate climbed to 2.9% from 2.8%.

Energy prices hit European households directly. German consumer sentiment deteriorated more sharply than expected heading into October, as rising energy costs weighed on income expectations. A consumer squeezed by energy bills spends less on everything else, which slows growth even as prices rise.

The relationship between oil and EUR/USD has a twist. Falling oil prices are a structural positive for the euro through the terms-of-trade channel, but they also tend to bring a more aggressive downward repricing of ECB rates relative to the Fed, which weighs on the pair through rate differentials. Last week showed that tension: when Brent briefly dropped below $100 on hopes of a US-Iran breakthrough, European bond yields fell and the euro still slid to its lowest level since late July.

Monday's move removes that ambiguity. Rising oil lifts US yields and Fed hike odds more than it lifts ECB expectations, while hurting European terms of trade. Both channels point the same way.

The Dollar Index at 101.09 and the Broad Greenback Bid

The euro's weakness is as much a dollar story as a European one. The dollar index trades at 101.09, up 0.1% on the session, after running to three-month highs against its major rivals earlier this month. The greenback is drawing support from high Treasury yields, firm US economic data and Fed tightening bets, and the rejection of Iran's peace proposal added a risk-off layer on Monday.

The euro carries 57.6% of the dollar index weighting, so the index and EUR/USD move almost as mirror images. A 0.1% gain in the index this morning matches the euro's 0.13% decline. When the dollar index rises, the euro is the main counterpart doing the falling.

Last week's data fed the dollar bid. Stronger-than-expected US PMI readings and a series of hawkish remarks from Fed policymakers pushed EUR/USD below 1.1400 on September 24, touching a fresh near two-month low. Several Fed officials have cited resilient growth and a firm labor market as reasons for further tightening. US data keeps beating expectations while European data, though improving, cannot close the policy gap.

The risk-off tone across markets reinforces the move. S&P 500 futures are down 0.52%, Nasdaq-100 futures are off 0.92%, and the VIX has jumped 9.82% to 16.33. South Korea's Kospi fell 2.7% and China's CSI 300 dropped 2.22% overnight. In risk-off sessions, the dollar tends to attract safe-haven flows, and this morning is no exception.

Gold's collapse confirms the dollar's strength. Spot gold fell 3.3% to $4,146, its lowest since August 5, as higher yields and a firmer dollar crushed demand for non-yielding assets. When gold and the euro fall together against the dollar, the move is driven by US rates rather than anything specific to Europe.

The August episode shows what the euro needs. When coordinated yen-buying intervention by Japan and the United States pushed the dollar index down to 99.79, a decline of more than 1.5% in a week, the euro caught a lift from broad dollar weakness. A similar dollar reversal would be the fastest route back above 1.1450 for EUR/USD.

For now, the dollar has every advantage: the highest policy rates among major economies, the highest long-term yields since 2007, energy self-sufficiency during an oil shock and safe-haven status during a war. The euro cannot match any of those on its own.

Eurozone Growth Is Holding Up: PMIs at 53.1 and German Business Confidence at a Three-Year High

The European economy is performing better than the currency suggests, and that resilience is the strongest argument against a collapse in EUR/USD. September's flash purchasing managers' indexes surprised to the upside. The services index jumped to 53.0, its highest level since November, while the composite index rose to 53.1 from 52.0. Eurozone private-sector activity expanded at its fastest pace in nearly three and a half years.

Germany led the improvement. German business sentiment rose more than expected in September to its highest level in more than three years, following stronger-than-expected PMI data. The eurozone's largest economy is absorbing the energy shock better than forecasters expected.

The ECB's own staff projections reflect that resilience. The September baseline sees euro area growth at 0.9% for 2026, 1.4% for 2027 and 1.5% for 2028. The 2026 and 2027 figures were revised higher from June, mainly reflecting greater-than-expected resilience in the economy. ECB President Christine Lagarde said growth risks tilt to the downside while inflation risks tilt to the upside.

Currency markets ignored the good news. The upbeat September PMIs were roundly dismissed by forex traders, despite services and composite readings landing comfortably above forecasts. The euro kept falling on the day of the release. That reaction shows how completely US rates and oil are dominating the pair: strong European growth data cannot move EUR/USD while the Treasury-Bund spread sits at 160 basis points.

The contrast with household data matters. Businesses are reporting strong activity, but consumers are feeling the energy squeeze. German consumer sentiment deteriorated more than expected heading into October. That split between business optimism and household pessimism mirrors the US, where the University of Michigan sentiment index fell to 48.1 while hard data held firm.

Resilient growth supports the ECB's tightening bias. A central bank facing 3.3% inflation and an economy expanding at its fastest pace in three and a half years has room to hike again. If the flash September inflation data on Wednesday shows prices accelerating further, the market could price a second ECB hike with higher probability, narrowing the rate gap with the Fed.

That is the euro's best path higher: European growth strong enough to force a more aggressive ECB, while the Fed pauses. For now, the market sees the opposite, with the Fed moving faster. But the growth data gives the euro a floor that did not exist during previous energy shocks.

The ECB Outlook: 3.3% Inflation, 2.5% Core Forecast for 2027 and a Meeting-by-Meeting Stance

The ECB's reaction to Wednesday's inflation data will determine whether the euro can fight back. The September staff projections see headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. Core inflation, excluding energy and food, is forecast at 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028. The 2026 headline forecast was unchanged from June, while 2027 and 2028 were revised higher.

The upward revision to 2027 core inflation matters most. A central bank that projects underlying inflation rising from 2.5% this year to 2.6% next year, with the target at 2%, has a clear mandate to keep tightening. The ECB 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.

The ECB is not committing to a path. The Governing Council said it will follow a data-dependent, meeting-by-meeting approach and is not pre-committing to a particular rate path. That language leaves every future meeting open, and it makes Wednesday's flash inflation reading the most important European data point of the month.

August's inflation breakdown showed a mixed picture. Headline inflation rose to 3.3%, driven by the 14.3% jump in energy. Unprocessed food and non-energy industrial goods inflation also accelerated. But services inflation eased to a four-month low of 3.0%, and core inflation edged down to 2.4%, below forecasts of 2.5%. The energy shock is lifting headline prices while underlying inflation holds steady.

That split defines the ECB's dilemma. If core inflation stays near 2.4% while energy drives the headline number, the ECB can argue that the shock is temporary and slow its hiking. If core starts rising as energy costs feed into services and goods, the ECB will need to tighten more aggressively. The first path is bearish for the euro; the second is bullish.

European bond markets have already repriced sharply. Euro area government bond yields surged to 15-year highs in early September as the sell-off deepened. Germany's 10-year Bund climbed from below 3% in early 2026 to 3.624% today. Before the Middle East conflict began, markets had anticipated no ECB hikes in 2026, with some traders betting on easing. The ECB has now hiked twice.

The euro needs the ECB to match the Fed's pace. At the moment, money markets price one more ECB hike with certainty and a second at 40%, against a 70.3% chance of a Fed hike in October alone.

The Fed Outlook: 70.3% October Hike Odds and a Dollar Carry Advantage

The Federal Reserve is the dominant force in EUR/USD, and its path is moving faster than the ECB's. Fed funds futures price a 70.3% probability of a 25-basis-point hike at the October 28 meeting, up 6.1 percentage points in a single session. A week ago, that probability stood at 57%. The market has added 13.3 percentage points of hike probability in five trading days.

The Fed's September 16 hike lifted the target range to 3.75%–4.00% and came with a signal that more increases could follow. Chair Kevin Warsh set a hawkish tone at Jackson Hole in August, saying the central bank would have work to do if policymakers were not confident inflation was returning to 2%. Since then, the Fed has delivered one hike and the market expects at least one more.

The inflation backdrop gives the Fed cover. The University of Michigan's September survey showed year-ahead inflation expectations at 4.6%, even as sentiment fell to 48.1. Diesel hit a record $6.52 per gallon last week and gasoline averaged above $4.47. Households expect prices to keep rising, which is the combination that pushes central banks to tighten.

The Treasury offered a dissenting view. Treasury Secretary Scott Bessent urged the Fed to keep an open mind, arguing that productivity gains from artificial intelligence and deregulation could help contain inflation. That view, if the Fed adopted it, would slow the hiking cycle and weaken the dollar. So far, the market has not moved toward it.

The yield curve confirms the Fed's hawkish lean. The 2-year Treasury yields 4.91%, pricing further tightening ahead. The 5-year crossed 5% on September 23 for the first time since 2007 and now sits at 5.06%. The 10-year at 5.22% is the highest since 2007, and the 30-year at 5.51% is the highest since 2004.

For EUR/USD, each additional Fed hike adds to the dollar's carry advantage. A move to 4.00%–4.25% in October would take the gap between the top of the Fed range and the ECB deposit rate to 175 basis points. That would be the widest spread of the current tightening cycle, and it would reinforce the flow of capital into dollar assets.

The key inputs arrive this week. Wednesday's PCE inflation report will either confirm or challenge the Fed's hawkish bias. Friday's payrolls report will show whether the labor market is strong enough to justify further tightening. A hot PCE and strong payrolls would push October hike odds toward 85%, and EUR/USD toward 1.1300.

European Markets and Bunds: Stocks Green, the 10-Year at 3.624%

European assets are showing surprising resilience on Monday, which contrasts with the euro's weakness. The UK's FTSE 100 rose 0.46%, helped by a surge in housebuilder stocks, while France's CAC 40 gained 0.37%. European equities are outperforming US futures, which are down between 0.52% and 0.92%.

The sector composition explains the divergence. European indexes carry heavier weightings in energy and financials, which benefit from higher oil and higher rates, and lighter exposure to the AI hardware names that are selling off after OpenAI paused training of its most capable models. Oil majors listed in Europe gain directly from Brent at $106.55.

German Bunds are holding steady. The 10-year Bund yield sits at 3.624%, virtually unchanged, as traders weigh sticky energy inflation ahead of a data-packed week. The consolidation in Bunds mirrors a pause in US Treasuries after the 10-year touched 5.18% on Friday and the 30-year reached 5.47%. Monday's move pushed US yields higher again while Bunds stayed flat, widening the transatlantic spread.

That widening is the euro's problem. The Treasury-Bund 10-year spread has grown to 160 basis points. When US yields rise and Bund yields stay flat, the spread widens, and the dollar gains relative appeal. European bonds are not selling off as hard as Treasuries, which reflects the market's view that the Fed will tighten more than the ECB.

The Bund's path through 2026 shows how much the energy shock has repriced European rates. The 10-year yield sat at 2.87% in early February, when eurozone inflation was 1.7% and markets expected steady ECB rates through the year. It climbed above 3% in April as the Middle East conflict escalated and investors priced three ECB hikes. Today it sits at 3.624%, 75 basis points above its February level.

Germany's borrowing needs add pressure. The country planned a record €512 billion of debt issuance this year to fund infrastructure and defense spending. That supply has kept upward pressure on Bund yields even when inflation eased earlier in the year.

For EUR/USD, the key is the relative move. If Wednesday's flash eurozone inflation runs hot, Bund yields could rise faster than Treasuries, narrowing the spread and supporting the euro. If US PCE runs hot instead, Treasuries will lead, widening the spread and pushing the euro lower. The two reports land on the same morning, which sets up a direct test of relative inflation between the two economies.

Positioning and Momentum: Below the 50-Day EMA With Negative Momentum Signals

The technical picture for EUR/USD has deteriorated through September. The pair trades below its 50-period exponential moving average, which acts as dynamic resistance and adds downside pressure. Price is moving along a minor downtrend line that has guided the decline from the September 21 high at 1.1490. Momentum indicators are generating negative signals after reaching overbought levels during the mid-September rally.

The trend structure is clear. Each rally in the past two weeks has failed below the prior high. The pair topped at 1.1541 on September 15, fell after the Fed hike, rebounded to 1.1490 on September 21, then broke lower again. That sequence of lower highs defines a short-term bearish trend.

The daily fixings show the steady decline. From 1.1541 on September 15, the pair shed 157 pips to 1.1384 by September 23 and has held below 1.1400 for four sessions. The move from 1.1490 to 1.1368 took four sessions, with the steepest drop on September 23, when the pair fell 64 pips in a single day. That was the session when the 5-year Treasury crossed 5% for the first time since 2007.

The one-month low at 1.1360 is the line the market is testing. EUR/USD has approached it twice, on September 24 at 1.1368 and again this morning, without breaking through. A third test that fails to hold would confirm a breakdown. A double bottom near 1.1360 with a push back above 1.1400 would suggest the decline is exhausting.

Volatility remains contained. The largest single-day move in the past week was a 0.153% decline on September 22. EUR/USD is grinding lower rather than collapsing, which reflects the balance between the dollar's rate advantage and the eurozone's resilient growth. A grinding decline tends to continue until a catalyst breaks it, rather than reversing on its own.

The oversold condition is not yet extreme. After momentum indicators reached overbought levels in mid-September, they have fallen but have not reached the deeply oversold readings that typically precede sharp reversals. That leaves room for further downside before a technical bounce becomes likely.

For forecasting, the combination is bearish in the near term: price below the 50-period EMA, a descending trendline, lower highs and negative momentum. The pair needs a daily close above 1.1400 to break the trendline and above 1.1448 to challenge the sequence of lower highs.

Technical Map: 1.1360 Support, 1.1400 and 1.1490 Resistance

The chart has narrowed EUR/USD's near-term path to a defined set of levels. The first and most important support is 1.1360, the one-month low. The pair trades 17 pips above it at 1.1377. A daily close below 1.1360 would mark a new low for the September decline and open the path toward 1.1300.

The 1.1300 level is the next major support, a round number that has not been tested since the late-July lows. A break of 1.1300 would take EUR/USD to its weakest level of the summer and extend the one-month decline beyond 2%. Below that, 1.1250 marks the next psychological reference.

On the upside, the first resistance is 1.1400, the handle that has capped every rally attempt since September 24. The pair has traded below 1.1400 for four straight sessions. Reclaiming it on a daily close would break the short-term downtrend line and signal that selling pressure is easing.

Above that, 1.1448 marks the September 22 fixing, the last level before the sharp drop on September 23. Clearing 1.1448 would neutralize the week's breakdown. The September 21 high at 1.1490 is the next hurdle, and a daily close above it would break the sequence of lower highs and turn the short-term trend neutral.

The broader resistance sits at 1.1541, the September 15 level before the Fed hike. A return to 1.1541 would require a significant reversal in rate expectations, most likely a Fed pause combined with a more aggressive ECB.

The week's trading range is defined: 1.1360 support against 1.1400 resistance, a band of just 40 pips. That compression reflects a market waiting for Wednesday's data. When the range breaks, the move is likely to be directional.

Scenario mapping ties the levels to the data. A hot US PCE reading with a cool eurozone flash CPI would push EUR/USD through 1.1360 toward 1.1300. A cool PCE with a hot eurozone CPI would lift the pair through 1.1400 toward 1.1448. Mixed data would likely leave the pair trapped between 1.1360 and 1.1400 into Friday's payrolls.

The most important single level remains 1.1360. As long as it holds on a daily closing basis, the decline is a pullback inside a range. A break turns it into a trend.

The Week's Calendar: Eurozone Flash CPI and US PCE Land on the Same Morning

EUR/USD faces one of the most important data weeks of the quarter, with inflation readings from both economies arriving on the same day. The setup gives traders a direct test of relative inflation, which feeds directly into relative rate expectations.

Monday brings the Dallas Fed manufacturing index at 10:30 a.m. ET, with a reading of 7.3 expected against 11.6 previously. New York Fed President John Williams begins a two-day regional visit.

Tuesday delivers the July S&P Case-Shiller home price index at 9:00 a.m. ET, followed at 10:00 a.m. by the Conference Board's September consumer confidence index and the August Job Openings and Labor Turnover Survey. Chicago Fed President Austan Goolsbee speaks at 1:00 p.m. and Williams at 2:00 p.m.

Wednesday is the decisive day. The eurozone flash HICP estimate for September is due on September 30, following August's 3.3% headline and 2.4% core readings. Flash September eurozone CPI prints are expected to support the case for further ECB hikes. A headline reading above 3.3% with core rising would push the market toward pricing a second ECB hike with higher probability, supporting the euro.

Hours later, the US data hits. September's ADP employment report arrives at 8:15 a.m. ET, followed at 8:30 a.m. by the third estimate of second-quarter GDP and the personal income and outlays release with headline and core PCE price indexes. PCE is the Fed's preferred inflation gauge. A hot core PCE would push October hike odds above 80% and drive EUR/USD lower. The September Chicago business barometer follows at 9:45 a.m. Wednesday is also quarter-end, which adds rebalancing flows to the volatility.

Thursday brings initial jobless claims at 8:30 a.m., the final S&P Global manufacturing PMI at 9:45 a.m. with 57 expected, and ISM manufacturing at 10:00 a.m. with 54.9 expected.

Friday closes with the September employment report at 8:30 a.m., including nonfarm payrolls, the unemployment rate and average hourly earnings. Dallas Fed President Lorie Logan speaks the same day.

Geopolitics runs alongside. US-Iran talks through mediators are expected to restart this week. A credible framework for reopening Hormuz would drop Brent, improve European terms of trade and give EUR/USD its strongest non-data catalyst.

EUR/USD Price Forecast: Scenarios, Levels and the Verdict

The forecast for EUR/USD this week turns on relative inflation and relative central bank paths. The pair trades at 1.1377, 17 pips above its one-month low, with the dollar holding every structural advantage: a 150-basis-point policy rate gap, a 160-basis-point 10-year yield spread, energy self-sufficiency during an oil shock and a 70.3% probability of another Fed hike in October.

The bearish scenario carries the higher probability. If US core PCE runs hot on Wednesday while eurozone core inflation holds near 2.4%, the market will price a faster Fed and a slower ECB. October hike odds would move above 80%, the Treasury-Bund spread would widen beyond 160 basis points, and EUR/USD would break 1.1360 on a daily close. The next target is 1.1300, with 1.1250 in play if Friday's payrolls confirm labor-market strength. That path represents a decline of 0.7% to 1.1% from current levels.

The base case is range trade between 1.1360 and 1.1400 into the quarter-end close. Mixed inflation data on both sides leaves relative rate expectations unchanged, European growth data keeps a floor under the euro, and the dollar's carry advantage caps rallies. The pair closes September with a monthly loss near 1.8%, its weakest month since the conflict drove the dollar higher earlier in the year.

The bullish scenario requires one of two shocks. The first is a hot eurozone flash CPI combined with a soft US PCE. That combination would lift ECB hike expectations while cutting Fed odds, narrowing the rate gap from both sides. The second is a breakthrough on Hormuz, which would drop Brent below $100, improve European terms of trade and reduce the inflation pressure driving Fed hikes. In either case, EUR/USD reclaims 1.1400, breaks the short-term downtrend and targets 1.1448 and then the September 21 high at 1.1490. That path represents upside of 1%.

The eurozone's fundamentals provide more support than the price suggests. Composite PMI at 53.1 marks the fastest private-sector expansion in three and a half years, German business confidence sits at a three-year high, and the ECB has upgraded its 2026 and 2027 growth forecasts. That resilience is why EUR/USD is grinding lower rather than collapsing, and why the pair is down only 3.01% over twelve months despite an energy shock that has lifted Brent more than 70% this year.

But currency markets are ignoring European growth and trading on rates and oil. Strong September PMIs failed to lift the euro, and the pair fell anyway. Until the Fed-ECB gap narrows or oil breaks lower, the dollar holds the upper hand.

The verdict for EUR/USD at 1.1377: bearish in the near term, with 1.1360 as the line that decides the week and 1.1300 as the next target if it breaks. Expect range trade between 1.1360 and 1.1400 until Wednesday's twin inflation reports, followed by a directional move. The medium-term outlook stays neutral above 1.1300, supported by resilient eurozone growth and an ECB still in hiking mode, with a return to 1.1490 possible only after a daily close above 1.1448 confirms that relative inflation has shifted in the euro's favor.

That's TradingNEWS