Below is a rewritten and expanded version of the original analysis article titled “EUR/USD Forex Signal: Sellers Control After Quick Reversal,” originally published by DailyForex on October 6, 2025. Special credit to the original author for technical insights and foundational analysis.
EUR/USD Forex Signal – October 6, 2025
Original author: DailyForex Technical Analyst Team
Overview and Market Sentiment
The EUR/USD pair fell sharply on October 5, reversing gains made earlier in the week, as broader market sentiment tilted risk-off and U.S. dollar strength dominated currency trading. The pair declined from a high of 1.0640 and dropped below the 1.0500 mark before moderating in early trading on October 6. Renewed optimism around the U.S. economy, reinforced by hawkish comments from Federal Reserve officials and strong labor market data, has helped push the dollar higher at the euro’s expense.
The trend for the EUR/USD pair remains bearish in the short and medium terms. Resistance levels appear increasingly difficult for bulls to overcome, and any rebounds have been short-lived. Sellers are increasingly in control, and unless macroeconomic data shifts this dynamic, continued downside can be expected.
Key Technical Levels to Watch
Resistance Levels:
– 1.0565: Previous resistance zone where price failed to establish support after breaking through
– 1.0604: Intraday swing high; marks potential profit-taking area for shorts
– 1.0640: Recent top and higher resistance; possibly a reversal pivot if reached again
Support Levels:
– 1.0480: Current psychological and historical support; next threshold for sellers
– 1.0447: Lower support level aligned with February 2024 lows
– 1.0400: Strong round-number support area; may offer stabilization if reached
Price Action Commentary
The EUR/USD pair exhibits strong bearish momentum after being rejected at 1.0640 on October 4. This level coincides with an earlier resistance zone and confirms continued market aversion to buying the euro around that price. This recent rejection formed a double-top structure with the October 2 high. The breakdown below the 1.0565 level further strengthened bear momentum, sending the pair to multi-week lows. A brief consolidation occurred around 1.0500, but sellers remain dominant in the current environment.
Momentum indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest oversold conditions on the 4-hour chart, but historical precedent shows that such conditions can persist during extended bearish trends. Therefore, traders are advised to remain cautious of a temporary recoil that can trap long positions before further declines resume.
Market Drivers and Macro Themes
Several interrelated macroeconomic factors are driving the euro lower against the U.S. dollar:
US Dollar Strength:
– Fed officials reiterated the central bank’s commitment to controlling inflation, keeping interest rates elevated “for longer.” These comments boosted market expectations of persistent hawkishness.
– Yields on U.S. Treasury bonds rose sharply, with 10-year yields surpassing 4.90 percent, increasing dollar demand from yield-seeking investors.
– Labor market indicators, particularly jobless claims and continuing claims, underscored the strength of the U.S. economy and the likelihood of a tight labor market sustaining upward wage pressures.
Eurozone Weakness:
– Eurozone Purchasing Managers’ Index (PMI) data continue to reflect contraction, with readings below the 50.0 threshold in both services and manufacturing sectors.
– German factory orders and industrial production figures fell below expectations, adding pressure on the euro.
– The European Central Bank (ECB) has signaled a plateau in its tightening path, diminishing the yield appeal of the euro compared to the dollar.
Geopolitical Caution:
– Rising energy prices due to renewed concerns in the Middle East place added inflationary pressure on the European economy, particularly if gas prices spike heading into winter
Read more on EUR/USD trading.