EUR/USD Forecast: Break Below 1.1165 Could Target 1.1000

Nevertheless, the euro remains under pressure this week amid concerns about a deepening political crisis in France, which could face a sovereign credit rating downgrade as Moody's prepares to review its assessment on October 23. Over the weekend, the country experienced some of its largest and most intense protests in recent years, prompting President Emmanuel Macron to address the nation, condemn the violence and call for dialogue to resolve the crisis. In addition, rising energy prices at the beginning of the heating season have contributed to accelerating inflation across the eurozone. In September, the Consumer Price Index increased from 0.4% to 0.6% month-on-month and from 3.2% to 3.8% year-on-year, while the core indicator, excluding energy, food, alcohol and tobacco, remained at 0.2% on a monthly basis and accelerated from 2.4% to 2.5% annually. Persistent price pressures above the European Central Bank's (ECB) 2.0% target could force policymakers to consider further monetary tightening.

The US dollar, another key driver of the pair, is trading near 101.8–101.9 on the US Dollar Index (USDX), after losing some ground on Friday following comments from Federal Reserve Chair Kevin Warsh at the annual meetings of the International Monetary Fund (IMF) and World Bank. As expected, the official maintained a cautious position and gave no clear indication of the future direction of interest rates, emphasising that upcoming monetary policy decisions would depend on incoming economic data. At the same time, he reiterated the regulator's commitment to controlling inflation if price pressures remain elevated. Against this backdrop, market expectations of the Fed leaving borrowing costs unchanged at its October 27–28 meeting have strengthened, according to the Chicago Mercantile Exchange (CME) FedWatch Tool. The influence of US inflation data and monetary policy expectations on the currency pair was also highlighted in our previous EUR/USD forecast.

Support and resistance levels

On the daily chart, the trading instrument remains above the support line of the descending channel with boundaries at 1.1640–1.1140.

Technical indicators are strengthening their sell signal: the fast exponential moving averages (EMAs) of the Alligator indicator remain below the slow ones, maintaining a stable spread, while the Awesome Oscillator (AO) histogram is forming corrective bars in negative territory.

Support levels: 1.1165, 1.1000.

Resistance levels: 1.1285, 1.1465.

EUR/USD Trading Scenarios and Exchange Rate Forecast

Short positions may be opened after the price declines and consolidates below 1.1165, with a target at 1.1000. Stop-loss: 1.1240. Estimated implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 1.1285, with a target at 1.1465. Stop-loss: 1.1200.