EUR/USD Forecast: 1.1108 Support in Focus After Fed and ECB Decisions

The Federal Reserve left its federal funds target range unchanged at 3.75–4.00%, stating that additional information would help policymakers determine the stance needed to return inflation to the 2.0% target. Officials described economic activity as expanding strongly, with resilient domestic spending, robust capital investment and little change in unemployment. However, Chair Kevin Warsh indicated that he did not view the economy as overheating, pointing to productivity improvements that could support stronger growth without necessarily intensifying inflation. Elevated price pressures leave further tightening possible, but a December rate increase remains a potential outcome rather than a certainty. The implications of diverging policy expectations were discussed in our previous EUR/USD forecast.

The euro remains vulnerable to slowing business activity and political uncertainty in France, the euro area’s second-largest economy. The preliminary October composite PMI declined from 53.1 to 51.9, signalling continued expansion at a slower pace. Meanwhile, the European Central Bank’s October 29 decision confirmed unchanged interest rates: 2.50% for the deposit facility, 2.65% for main refinancing operations and 2.90% for the marginal lending facility. The ECB warned that higher energy prices posed upside risks to inflation and downside risks to growth. It reiterated a data-dependent, meeting-by-meeting approach without committing to a particular rate path.

Support and Resistance Levels

In the supplied technical setup, the pair has broken below the lower boundary of a long-term descending channel and is trading near 1.1108 (Murrey Math [–2/8]). A sustained break below this level could open the way toward 1.0986 (Murrey Math [–2/8], W1) and 1.0850 (61.8% Fibonacci retracement). Conversely, consolidation above 1.1352 (Murrey Math [2/8]) could support a recovery toward 1.1535 (Murrey Math [5/8], 23.6% Fibonacci retracement), 1.1718 (Murrey Math [8/8], the upper boundary of the descending channel) and 1.1840 (Murrey Math [+2/8]).

Technical indicators maintain a sell signal: Bollinger Bands are turning downward, the MACD histogram is expanding in negative territory, and the Stochastic oscillator has reached the oversold zone, leaving room for a limited corrective rebound.

Resistance levels: 1.1352, 1.1535, 1.1718, 1.1840.

Support levels: 1.1108, 1.0986, 1.0850.

EUR/USD Trading Scenarios and Exchange Rate Forecast

Short positions may be opened below 1.1108, with targets at 1.0986 and 1.0850 and a stop-loss at 1.1190. Estimated holding period: 5–7 days.

Long positions may be opened above 1.1352, with targets at 1.1535, 1.1718 and 1.1840 and a stop-loss at 1.1240.