EUR/USD Drops to 1.1670 as Fed Cut Strengthens Dollar, Outlook Turns Bearish

Momentum in the greenback may persist into the next Fed meeting on October 29, where markets, per the CME FedWatch Tool, assign an 87.7% probability of a cut to 4.00%. Meanwhile, Q2 GDP was reported at 3.8%, above the 3.3% forecast and the prior –0.5%, with the GDP deflator at 2.1% versus 2.0% previously and 3.8% before that. Initial jobless claims fell to 218k versus 233k expected, also supporting the dollar.

According to an ECB report, inflation expectations remain anchored: the one-year-ago assessment stayed at 3.1%, while the next-12-months outlook is 2.8%. Longer-term expectations (3–5 years) sit slightly above the 2.0% target. The 12-month growth outlook remains negative (–1.2%), and unemployment expectations have risen (10.7%), heightening recession risks. Against this backdrop, the ECB is likely to keep rates unchanged for the coming months while maintaining a hawkish tone due to inflation expectations; however, if growth slows further and unemployment rises, a tilt toward easier policy in 2026 becomes more plausible.

Support and resistance

The long-term trend remains bullish, but a correction is underway. Prices have reached the 1.1670–1.1600 support area, where long positions targeting 1.1900 (September high) and 1.2085 become relevant. A decisive break below 1.1670–1.1600 would open the way toward the trend boundary at 1.1400; after a reversal there, fresh longs toward 1.1650 are favored.

The medium-term trend is also bullish: in September, price hit zone 2 (1.1918–1.1895) and turned lower toward support at 1.1686–1.1663. After testing that area, longs toward 1.1791 and 1.1918 are in play; otherwise, the trend may flip bearish toward 1.1454–1.1431.

Resistance: 1.1900, 1.2085, 1.2250.

Support: 1.1670, 1.1600, 1.1400.

Trading scenarios and EUR/USD outlook

Long positions: from 1.1670 targeting 1.1900, stop-loss at 1.1600. Horizon: 9–12 days.

Short positions: below 1.1600 targeting 1.1400, stop-loss at 1.1700.