EUR/USD Price Forecast: Next on the upside comes 1.1670
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UPGRADE- EUR/USD resumes its uptrend and briefly exceeds the 1.1600 barrier.
- The US Dollar trades with marked losses and retreats to monthly lows.
- The newly released Weekly ADP report came in at -11.250K through October 25.
EUR/USD manages to rapidly leave behind Monday’s marginal decline, finding extra legs and advancing to two-week highs just over 1.1600 the figure on turnaround Tuesday.
The pair’s decent advance comes in response to the resurgence of the downward bias in the US Dollar (USD), which in turn relegates the US Dollar Index (DXY) to fresh lows for the current month.
Meanwhile, optimism surrounding a deal to end the US federal government shutdown remains in place and underpins the improved sentiment in the risk-linked galaxy, while disheartening prints from the weekly ADP report (-11.250K) also lend wings to the idea of further rate cuts by the Federal Reserve (Fed), keeping the Greenback’s price action subdued.
Washington edges closer to reopening
It finally looks like there’s light at the end of the tunnel for the longest government shutdown in US history. After weeks of political gridlock, the Senate approved a funding bill in a 60–40 vote on Monday, moving it to the House for a final decision, potentially as soon as Wednesday.
The measure would fund most federal agencies through January 30 and provide full-year budgets for a handful of departments. House Republicans sound confident they can get it over the line, and once it reaches President Trump’s desk, he’s expected to sign it, officially ending the shutdown.
For hundreds of thousands of federal workers waiting on paychecks, and for an economy that’s been feeling the pinch, that moment can’t come soon enough.
Trade thaw offers some relief
After months of trade tension, Presidents Donald Trump and Xi Jinping met recently in South Korea, giving global markets a brief dose of calm. The talks ended with an agreement to extend the current truce in the US–China trade war: not a breakthrough, but at least a pause in the hostilities.
Following about two hours of discussion, Trump said the US would scale back some tariffs, while China agreed to restart soybean imports, maintain rare earth exports, and work more closely with Washington on fentanyl enforcement.
Beijing later confirmed that both sides had agreed to extend the trade ceasefire for another year, a modest but positive sign that the two economic heavyweights are willing to keep the dialogue going.
Fed takes the cautious route
The Federal Reserve (Fed) kept things balanced at its October 29 meeting, cutting rates by 25 basis points and restarting modest Treasury purchases to ease funding pressures in money markets.
The move, approved by a 10–2 vote, brought the target range down to 3.75%–4.00%, exactly as markets had expected. Policymakers framed it as a precautionary step amid some signs of labour market softening, rather than the start of a new easing cycle.
Fed Chair Jerome Powell acknowledged a range of views within the Federal Open Market Committee (FOMC) and urged investors not to assume another cut in December.
Markets are now pricing in roughly 17 basis points of additional easing by year-end and about 85 basis points by the end of 2026, a tad higher following the discouraging Weekly ADP release.
Those bets, however, could shift once the government reopens and a wave of delayed data, including the critical Nonfarm Payrolls report, hits the wires.
ECB content to stay on hold
Over in Europe, the European Central Bank (ECB) left rates unchanged at 2.00% for a third consecutive meeting last week, signalling comfort with where things stand for now. Growth and inflation are hovering close to target, and after two percentage points of cuts earlier this year, officials appear in no rush to act again.
ECB President Christine Lagarde said global risks have eased somewhat thanks to the trade truce and Washington’s partial tariff rollback, though she cautioned that uncertainty remains high.
Market pricing points to just over 8 basis points of additional easing by the end of 2026, a sign traders think the ECB’s rate-cutting phase is largely done.
Tech corner
EUR/USD manages to extend its advance, albeit at a snail's pace, revisiting the 1.1600 region amid renewed weakness in the Greenback.
There is an initial hurdle at the weekly top at 1.1668 (October 28), a region reinforced by the interim 100-day and 55-day SMAs. The surpass of this region exposes a potential test of another minor hurdle at the weekly high of 1.1728 (October 17), ahead of the October peak at 1.1778 (October 1). North from here emerges the 2025 ceiling of 1.1918 (September 17), while extra advances from here could put the key 1.2000 threshold back on the radar.
On the flip side, immediate contention comes at the November floor at 1.1468 (November 5), seconded by the August trough at 1.1391 (August 1). A deeper retracement could unveil a challenge to the critical 200-day SMA at 1.1356, prior to the weekly low at 1.1210 (May 29) and the May bottom at 1.1064 (May 12).
Furthermore, momentum indicators improve further: the Relative Strength Index (RSI) bounces past the 49 level, opening the door to extra gains in the short-term horizon, while the Average Directional Index (ADX) below 17 suggest a still juiceless trend.
What’s next
EUR/USD remains caught in consolidation mode, waiting for a decisive catalyst to break free. A shift in the Fed’s tone, renewed appetite for risk assets, or stronger Eurozone bond demand at the expense of US Treasuries could all tip the balance, but for now, it’s still the Dollar’s own swings that are setting the tone.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
- EUR/USD resumes its uptrend and briefly exceeds the 1.1600 barrier.
- The US Dollar trades with marked losses and retreats to monthly lows.
- The newly released Weekly ADP report came in at -11.250K through October 25.
EUR/USD manages to rapidly leave behind Monday’s marginal decline, finding extra legs and advancing to two-week highs just over 1.1600 the figure on turnaround Tuesday.
The pair’s decent advance comes in response to the resurgence of the downward bias in the US Dollar (USD), which in turn relegates the US Dollar Index (DXY) to fresh lows for the current month.
Meanwhile, optimism surrounding a deal to end the US federal government shutdown remains in place and underpins the improved sentiment in the risk-linked galaxy, while disheartening prints from the weekly ADP report (-11.250K) also lend wings to the idea of further rate cuts by the Federal Reserve (Fed), keeping the Greenback’s price action subdued.
Washington edges closer to reopening
It finally looks like there’s light at the end of the tunnel for the longest government shutdown in US history. After weeks of political gridlock, the Senate approved a funding bill in a 60–40 vote on Monday, moving it to the House for a final decision, potentially as soon as Wednesday.
The measure would fund most federal agencies through January 30 and provide full-year budgets for a handful of departments. House Republicans sound confident they can get it over the line, and once it reaches President Trump’s desk, he’s expected to sign it, officially ending the shutdown.
For hundreds of thousands of federal workers waiting on paychecks, and for an economy that’s been feeling the pinch, that moment can’t come soon enough.
Trade thaw offers some relief
After months of trade tension, Presidents Donald Trump and Xi Jinping met recently in South Korea, giving global markets a brief dose of calm. The talks ended with an agreement to extend the current truce in the US–China trade war: not a breakthrough, but at least a pause in the hostilities.
Following about two hours of discussion, Trump said the US would scale back some tariffs, while China agreed to restart soybean imports, maintain rare earth exports, and work more closely with Washington on fentanyl enforcement.
Beijing later confirmed that both sides had agreed to extend the trade ceasefire for another year, a modest but positive sign that the two economic heavyweights are willing to keep the dialogue going.
Fed takes the cautious route
The Federal Reserve (Fed) kept things balanced at its October 29 meeting, cutting rates by 25 basis points and restarting modest Treasury purchases to ease funding pressures in money markets.
The move, approved by a 10–2 vote, brought the target range down to 3.75%–4.00%, exactly as markets had expected. Policymakers framed it as a precautionary step amid some signs of labour market softening, rather than the start of a new easing cycle.
Fed Chair Jerome Powell acknowledged a range of views within the Federal Open Market Committee (FOMC) and urged investors not to assume another cut in December.
Markets are now pricing in roughly 17 basis points of additional easing by year-end and about 85 basis points by the end of 2026, a tad higher following the discouraging Weekly ADP release.
Those bets, however, could shift once the government reopens and a wave of delayed data, including the critical Nonfarm Payrolls report, hits the wires.
ECB content to stay on hold
Over in Europe, the European Central Bank (ECB) left rates unchanged at 2.00% for a third consecutive meeting last week, signalling comfort with where things stand for now. Growth and inflation are hovering close to target, and after two percentage points of cuts earlier this year, officials appear in no rush to act again.
ECB President Christine Lagarde said global risks have eased somewhat thanks to the trade truce and Washington’s partial tariff rollback, though she cautioned that uncertainty remains high.
Market pricing points to just over 8 basis points of additional easing by the end of 2026, a sign traders think the ECB’s rate-cutting phase is largely done.
Tech corner
EUR/USD manages to extend its advance, albeit at a snail's pace, revisiting the 1.1600 region amid renewed weakness in the Greenback.
There is an initial hurdle at the weekly top at 1.1668 (October 28), a region reinforced by the interim 100-day and 55-day SMAs. The surpass of this region exposes a potential test of another minor hurdle at the weekly high of 1.1728 (October 17), ahead of the October peak at 1.1778 (October 1). North from here emerges the 2025 ceiling of 1.1918 (September 17), while extra advances from here could put the key 1.2000 threshold back on the radar.
On the flip side, immediate contention comes at the November floor at 1.1468 (November 5), seconded by the August trough at 1.1391 (August 1). A deeper retracement could unveil a challenge to the critical 200-day SMA at 1.1356, prior to the weekly low at 1.1210 (May 29) and the May bottom at 1.1064 (May 12).
Furthermore, momentum indicators improve further: the Relative Strength Index (RSI) bounces past the 49 level, opening the door to extra gains in the short-term horizon, while the Average Directional Index (ADX) below 17 suggest a still juiceless trend.
What’s next
EUR/USD remains caught in consolidation mode, waiting for a decisive catalyst to break free. A shift in the Fed’s tone, renewed appetite for risk assets, or stronger Eurozone bond demand at the expense of US Treasuries could all tip the balance, but for now, it’s still the Dollar’s own swings that are setting the tone.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
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