FX.co ★ EUR/USD

The euro weakened against the dollar, falling from its intraday high of around 1.400 to near 1.1380, as the dollar strengthened. This decline followed hawkish comments from New York Federal Reserve President John Williams, who reiterated the need to maintain a tight monetary policy. The dollar index (DXY), which measures the dollar against a basket of six major currencies, edged up slightly to around 101.17, hovering near its eight-week high of 101.23 reached earlier this week. Williams' tone was notably hawkish, with his index significantly above its historical average. His remarks highlighted the remarkable resilience of the US economy, noting that the risk of a decline in full employment is diminishing and that artificial intelligence initiatives are driving strong structural demand. Furthermore, Williams indicated that the possibility of an interest rate hike before the end of the year remains, given the persistent inflation risks, ensuring that market participants continue to price in a tight monetary policy. This hawkish rhetoric led to a surge in US Treasury yields, with the 10-year Treasury yield reaching 5.14%, its highest level in 19 years.

Earlier, the euro found brief support after the German IFO Business Climate Index for September exceeded expectations. The report showed the index accelerating to 89.9, surpassing market forecasts of 89.0 and the previous month's reading of 88.9. At the same time, both the current assessment and expectations sub-indices were higher than anticipated, suggesting that Europe's largest economy is demonstrating unexpected resilience despite broader regional challenges. Technically, the EUR/USD pair remains in a short-term downtrend, with the spot price continuing to trade below the key 20-day exponential moving average (EMA), which is around 1.515. A break below this key trend indicator suggests the current bearish momentum remains strong. However, the Relative Strength Index (RSI) at 25.5 indicates oversold conditions, which may limit the pace of selling in the short term but does not confirm a broader bullish reversal. On the upside, initial resistance lies at the 20-period Exponential Moving Average (EMA), requiring a daily close above this level to alleviate short-term downward pressure. Conversely, downside risks put the pair at risk of retesting its year-to-date low of 1.1325.