FX.co ★ EUR/USD

Technical and Fundamental Analysis of the EUR/USD Pair The EUR/USD pair extended its recovery for a third consecutive session on Friday, rising above the 1.1200 psychological level during Asian trading after rebounding from lows near 1.1100, its weakest level since May 2025. The euro has benefited from a combination of hawkish European Central Bank (ECB) expectations, a retreat in the US Dollar, and declining US Treasury yields. However, persistent geopolitical uncertainty and expectations of further Federal Reserve (Fed) tightening could limit the pair’s upside, leaving the latest recovery vulnerable to renewed selling pressure. The euro has found support from growing expectations that the ECB could raise interest rates as early as December. Rising energy prices have intensified concerns about renewed inflationary pressure across the Eurozone, strengthening the case for a more restrictive monetary policy stance if elevated costs begin to feed through to broader consumer prices. Higher energy prices present a challenge for European policymakers because they can push inflation upward while weighing on household purchasing power and business activity. If inflation remains persistent, the ECB may face greater pressure to maintain restrictive financial conditions or consider another rate increase. Investors are also monitoring preliminary third-quarter Eurozone gross domestic product (GDP) figures and consumer inflation data for additional clues about the region’s economic resilience and the likely direction of monetary policy. Stronger-than-expected inflation readings could reinforce expectations of further tightening and provide additional support for the euro. Conversely, weaker growth or softer price pressures could undermine the currency’s recent recovery. The US Dollar has retreated from a two-week high as optimism surrounding diplomatic efforts in the Middle East has encouraged some easing in demand for traditional safe-haven assets. Reports indicate that US Vice President JD Vance has communicated directly with Mohsen Rezaei, identified in the reports as a senior Iranian security official, in an effort to restart peace negotiations. Qatari mediators have also reportedly presented Iran with a new draft agreement intended to end the conflict involving Iran, the United States, and Israel. Potential disruptions to oil shipments could keep crude prices elevated, adding to inflationary pressures worldwide. For the United States, persistent inflation could strengthen the argument for additional monetary tightening, supporting the Dollar and limiting EUR/USD gains. According to the CME Group's FedWatch tool, markets are pricing in an approximately 75% probability of another Fed rate increase in December. US economic data have also supported the case for caution: third-quarter GDP growth was reported at an annualized rate of 3.4%, while September inflation remained above the Fed's 2% target. These factors suggest that Dollar weakness may prove temporary if economic resilience and inflation concerns continue to shape rate expectations. Against this backdrop, traders may remain reluctant to establish aggressive bullish positions in EUR/USD without stronger evidence that the pair has formed a sustainable short-term bottom. EUR/USD is trading around 1.1200, with the short-term recovery developing against a broader bearish structure. The four-hour (H4) chart shows that buyers have defended a significant demand area between 1.1100 and 1.1150, with a more concentrated demand zone around 1.1080–1.1135. This region includes recent swing lows where selling pressure eased, and buyers stepped in, allowing the current rebound to develop. However, the pair is approaching a substantial supply zone between 1.1210 and 1.1240, extending toward 1.1270 in a broader resistance assessment. This area represents a potential barrier where previous selling pressure emerged. A rejection could bring the pair back toward the 1.1150–1.1170 support shelf, while a sustained H4 close above 1.1240 would improve the recovery outlook and expose the 1.1270–1.1300 region. On the one-hour (H1) chart, price action appears more consolidative. Short-term demand is located around 1.1170–1.1185, while immediate supply lies between 1.1210 and 1.1220. The 20-period simple moving average (SMA), near 1.1195, is acting as a short-term pivot. Trading around or above this average suggests that immediate downside momentum has moderated, although this alone does not confirm a bullish reversal. The broader technical picture remains cautious, with the 50-period SMA cited around 1.1350–1.1360 on the higher timeframe serving as a distant reference for a more substantial recovery rather than an immediate target. Initial support lies at 1.1170–1.1185, followed by the broader 1.1150–1.1170 demand shelf. Stronger support is concentrated between 1.1100 and 1.1135. A decisive break below this region would weaken the recovery and could expose the recent low near 1.1100 to renewed selling pressure. On the upside, resistance is concentrated at 1.1210–1.1240, followed by 1.1270–1.1300 if buyers secure a sustained breakout. As long as EUR/USD remains below the main H4 supply zone, rallies may attract sellers despite the improving H1 momentum.