EUR/USD Outlook: 84% Fed Cut Odds Lift Euro as Momentum Builds Above $1.1550
EUR/USD held steady near $1.1575 during the European session, supported by a growing belief that the Federal Reserve is preparing...
Quick overview
- EUR/USD remained stable near $1.1575, buoyed by expectations of a Federal Reserve interest rate cut in December.
- Recent U.S. economic data, including a lower-than-expected retail sales increase and a drop in consumer confidence, has shifted investor sentiment away from the dollar.
- Geopolitical optimism surrounding peace discussions has also supported the euro, despite concerns over high sovereign debt risks in Europe.
- Upcoming U.S. economic releases and ECB speeches will be crucial in determining the short-term direction of EUR/USD.
EUR/USD held steady near $1.1575 during the European session, supported by a growing belief that the Federal Reserve is preparing to cut interest rates in December. Softer U.S. data has steadily pushed investors toward haven assets and away from the dollar, which usually benefits from uncertainty but is now losing appeal as the economic picture cools.
U.S. retail sales rose just 0.2% in September, half the market’s expected pace, while the Consumer Confidence Index dropped to a six-month low of 88.7. Producer inflation also eased, with core PPI slipping to 2.6% from the prior 2.9%. Together, these figures reinforce the view that demand is softening across several sectors of the economy.
Fed-rate expectations have shifted rapidly. Markets now price an 84% probability of a December cut, up from around 50% last week, according to CME FedWatch.
Geopolitical Optimism Lifts Euro Sentiment
The euro also received an indirect boost from progress in ongoing peace discussions. Negotiators on both sides signaled cautious optimism, and diplomatic channels are expected to remain active in the coming days. While the situation remains fluid, the tone helped improve broader risk appetite, giving EUR/USD additional support as the dollar weakened.
The European Central Bank’s latest Financial Stability Review did remind markets of elevated risks tied to high sovereign debt across several member states. This factor briefly cooled euro gains earlier in the session.
Upcoming Data to Watch
Short-term direction will depend heavily on incoming U.S. releases, including Durable Goods Orders, Initial Jobless Claims, and the Chicago PMI. ECB officials, including Philip Lane and Christine Lagarde, are also scheduled to speak, offering fresh insight into Europe’s policy outlook.
Key drivers to monitor:
- U.S. Durable Goods and jobless claims
- ECB speeches and guidance
- Dollar reaction to rate-cut expectations
EUR/USD Technical View
EUR/USD is stabilizing near $1.1573, trading inside a wide contracting triangle. Repeated rejections at the $1.1596 mark signal a clear ceiling, with recent candles forming spinning tops—often associated with hesitation at resistance.
That said, structure has improved materially. A higher low at $1.1550, an active rising trendline, and a reclaim of the 20-EMA support a constructive short-term tone. RSI above 57 indicates steady, but not stretched, momentum. The pair still sits under the 200-EMA, keeping broader conditions neutral.
A clean breakout above $1.1596 opens room toward $1.1657 and then $1.1710.
EUR/USD Trade Opportunity
A beginner-friendly long setup triggers only if EUR/USD closes strongly bullish above $1.1596—preferably with an engulfing candle showing definitive follow-through. An entry around $1.1605 keeps risk contained, with a stop below $1.1550 to protect against false breakouts.
The first target sits at $1.1657; extended momentum could push toward $1.1710. If price slips below $1.1550, the bullish setup is invalid, with downside risk toward $1.1503.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save