Last Updated on October 17, 2026 by Deon
EUR/USD Recovers After Fresh Low
EUR/USD finished the week stronger after touching a low of 1.1113 in 2026. The pair bounced back toward the 1.1250 area. The move has not yet altered the overall technical view.
The recent price moves are mainly caused by changes in how traders expect the US Federal Reserve to act. Higher‑than‑expected US inflation first lifted the US Dollar pushing EUR/USD lower. Later the Dollar gave back some of those gains when Federal Reserve Chair Kevin Warsh did not give markets a signal on when future rate changes might happen.
The outcome is a market where traders stay cautious. The Euro has come back. Sellers may still be waiting near key resistance zones.
Hot US Inflation Supports the Dollar
US inflation was a reason for the drop in EUR/USD. Septembers Consumer Price Index inflation rose 3.7% from the month last year up from 3.4% in August and higher than what markets expected. Core CPI, which leaves out food and energy climbed to 2.6% compared with 2.4% before.
These higher inflation numbers made people think that the Federal Reserve might have to keep a policy for a longer time.
Producer prices also fed into the inflation worries. US Producer Price Index inflation jumped to 6.3% year over year in September up from 5.6% in August. This was the yearly rise since 2022. These figures first made the Dollar stronger. Pushed EUR/USD lower.
Fed Policy Remains the Main Driver
with the hot inflation data the Dollar lost momentum later that week.Kevin Warsh said he is still committed to price stability but that monetary policy decisions will be taken at each meeting. His remarks did not give traders a sign of the next rate change.
Market pricing still points to another 25‑basis‑point rate rise before year‑end while hopes for an October move have fallen. December rate‑hike expectations remain much stronger.
This means EUR/USD could stay very sensitive to every US economic release and any shift in Fed expectations.
Treasury Yields Add to Volatility
US Treasury yields have also played a role in recent Dollar moves. The 10‑year Treasury yield ended the week to 5.10% below the multi‑decade high of about 5.31% hit earlier in October.
Yields first rose as investors thought about inflation and higher rates. Later a new demand for safe‑haven bonds pulled yields down as stock markets faced pressure.
For EUR/USD the direction of US yields stays important. Rising yields can back the Dollar. Squeeze EUR/USD, while falling yields can weaken the Dollar and let EUR/USD bounce back.
European Inflation Also Remains
Inflation is not only in the United States. Germanys annual Harmonized Index of Consumer Prices hit 3.3% in September while Eurozone inflation rose to 3.8%, the highest in three years.
The European Central Bank has already raised rates twice in 2026 and markets expect least one more 25‑basis‑point rise before year‑end.
ECB President Christine Lagarde said that monetary policy stays data‑dependent. She also noted that higher energy costs are a part of inflation though widespread secondary effects have not yet shown up.
Despite the hawkish tone the Euro has had a hard time staying strong against the Dollar.
EUR/USD Technical Outlook
The technical view still leans to the downside after the recent bounce. EUR/USD is trading below its moving averages on the daily chart. The 20‑day Simple Moving Average near 1.1290 acts as dynamic resistance.
A move above 1.1290 would give the real bullish sign. If buyers keep the recovery above that level the next higher targets might be around 1.1360 and 1.1470.
If resistance is not broken the pair could fall again.
On the chart buyers showed up near the 200‑week SMA at 1.1100. This is a long‑term level. A steady drop, below it could confirm that the overall bearish trend continues.
What Traders Should Watch
The EUR/USD outlook will stay closely tied to US monetary‑policy expectations.
The upcoming economic calendar is fairly light at the start of the week. Germanys Producer Price Index and ZEW economic sentiment survey will give information about the Eurozones largest economy.
Several ECB officials are also scheduled to speak while Federal Reserve policymakers will enter a blackout period before the FOMC meeting.
Later in the week preliminary October PMI figures for economies could give fresh clues about economic growth and business activity.
EUR/USD Forecas
The EUR/USD forecast remains cautiously bearish even though the pair has recovered toward 1.1250.
The first major test for buyers is 1.1290. If the pair stays above this level the recovery could reach 1.1360 and 1.1470.
On the hand if the pair fails near resistance 1.1100 could come back into focus. A decisive break below the 200‑week SMA would raise the risk of a move, toward the 1.1000 level.
For now the direction of the US Dollar is the factor. Fed expectations, Treasury yields, inflation data and broader risk sentiment will likely decide whether EUR/USD can build on its rebound or resume its decline.
