EUR/USD Gains Ahead of Key US CPI and Fed Policy Signals

The US dollar remains under pressure following the end of the longest government shutdown in US history. Yesterday, the House of Representatives approved a temporary funding bill by a vote of 222 to 209, allowing federal agencies to operate through the end of January 2026. Democrats have temporarily backed away from their demand to extend Affordable Care Act (ACA) tax credits, while Republicans have agreed to bring the issue to a vote in December. President Donald Trump signed the bill shortly after, which markets interpreted as positive, boosting interest in non-dollar assets. Even so, the current EUR/USD advance still looks fragile and may turn into a correction in the near term.

With political uncertainty fading, market attention will now shift to the Federal Reserve. Judging by recent comments, more Fed officials are leaning toward keeping the rate unchanged in December. Atlanta Fed President Raphael Bostic noted that he would support maintaining the current rate until there is “clear evidence” that inflation is returning to the 2.0% target. Boston Fed President Susan Collins also said that, barring meaningful deterioration in the labor market, holding the rate steady is the most reasonable option. Notably, she had twice voted in favor of easing earlier this year, but her stance has become more cautious. A December pause in the Fed’s “dovish cycle” now appears likely, although much will depend on the economic data released after federal agencies fully resume operations.

Meanwhile, the European Central Bank (ECB) is not expected to make any immediate policy changes. The eurozone economy remains generally stable—though growth has slowed to 1.3% year-over-year in Q3—and inflation is still close to the ECB’s target (2.1% in October).

Overall, the EUR/USD pair maintains a downside bias in the medium term.

Support and Resistance Levels

The instrument has moved above 1.1597 (Murray level [6/8]), supported by the middle Bollinger Band, which may extend the rise toward 1.1719 (Murray level [4/8]). If the price falls below 1.1536 (Murray level [1/8]), the decline may resume toward 1.1414 (Murray level [–1/8]), 1.1353 (Murray level [–2/8]), and 1.1230 (Murray level [6/8], W1).

Technical indicators allow for renewed downward momentum: Bollinger Bands have begun turning lower, MACD continues to fall in the negative zone, and Stochastic is in overbought territory and may soon reverse downward.

Resistance levels: 1.1597, 1.1719.

Support levels: 1.1536, 1.1414, 1.1353, 1.1230.

EUR/USD Trading Scenarios and Forecast

Short positions may be considered below 1.1536 or after a reversal near 1.1719, with targets at 1.1414, 1.1353, and 1.1230, and stop-losses at 1.1610 and 1.1780, respectively. Implementation period: 5–7 days.