This article is a rewritten version of the original analysis by Pablo Piovano, published on FXStreet. It provides a detailed examination of the EUR/USD currency pair, capturing the current market sentiment and technical factors influencing price movement. The content has been expanded to 1,000+ words to give traders a more in-depth perspective while maintaining the core themes and insights of the original publication.
Title:
EUR/USD Outlook: Euro Remains Under Pressure Despite Short-Term Recovery Efforts
Author:
Based on insights from Pablo Piovano, FXStreet
Date:
October 7, 2025
Overview:
The EUR/USD currency pair continues to exhibit bearish characteristics, following an uneventful attempt at recovery. The euro has failed to mount a convincing rebound after recent declines, as the broader market environment remains favorable to the US dollar. Despite some temporary upside corrections, the euro faces significant headwinds that limit its potential for sustained gains. This article delves into the technical and fundamental drivers influencing the pair’s price action and provides a comprehensive forecast for traders seeking direction in the forex market.
Market Background:
– Markets are currently navigating a complex macroeconomic environment characterized by persistent inflationary pressures and differentiated monetary policy outlooks among major central banks.
– The US Federal Reserve maintains a hawkish stance, leaving interest rates elevated to combat inflation, while the European Central Bank (ECB) appears to be approaching the end of its tightening cycle.
– Divergence in policy direction between the Fed and the ECB remains a key driver of capital flows and exchange rate dynamics, with the US dollar benefiting from higher interest rate differentials.
Recent Price Action:
– The EUR/USD attempted a minor bounce off multi-week lows in the 1.0450 region, briefly climbing toward 1.0550, but buyer momentum quickly faded.
– Selling interest emerged near that zone, strengthening the bearish trend evident on broader timeframes.
– The lack of follow-through suggests that market participants continue to view the euro with skepticism, particularly in light of robust US data and Fed rhetoric.
Technical Landscape:
1. Short-Term Indicators:
– Momentum oscillators, including the Relative Strength Index (RSI) and MACD (Moving Average Convergence Divergence), continue to lean bearish on the daily chart.
– RSI readings hover below the 50-level threshold, indicating weak buying interest from traders.
– The MACD histogram remains submerged in negative territory, reinforcing the dominant downward momentum.
2. Resistance and Support Levels:
– Immediate resistance lies near the 1.0550 area, coinciding with the 21-day simple moving average (SMA).
– A break above this level would expose subsequent resistance at 1.0610 and then 1.0670, leading up to the more critical barrier near 1.0740.
– On the downside, the pair continues to eye support at the psychological 1.0450 level, with further losses potentially extending toward 1.0400 and 1.0350, respectively.
3. Trend Analysis:
– The EUR/USD remains firmly entrenched in a downtrend, confirmed by the sequence of lower highs and lower lows recorded over recent weeks.
– Key moving averages, such as the 50-day and 200-day SMAs, are sloping downward, reinforcing bearish sentiment across intermediate and long-term horizons.
ECB and Euro Area Fundamentals:
– The European Central Bank is signaling that interest rate hikes may have reached their peak, following a string of increases aimed at curbing inflation.
– Comments from ECB officials suggest a wait-and-see approach, prioritizing inflation expectations and economic health over further policy tightening.
– Economic indicators from the eurozone are mixed. On one hand, inflation remains slightly above target, but on the other, industrial production and consumer confidence figures are weakening.
– The eurozone economy appears vulnerable to deceleration, especially as energy costs remain volatile and global demand slows.
Key Economic Data Points to Watch in the Euro
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