EUR/USD Price Forecast - EUR to USD Holds 1.1800 as Dollar Weakens, Powell and PMI Data in Focus

EUR/USD Holds 1.1800 as Dollar Weakens into Powell Speech

The EUR/USD (EUR/USD) pair is stabilizing near 1.1800, recovering from intraday lows at 1.1775 as traders balance Eurozone weakness against U.S. policy uncertainty. The U.S. Dollar Index (DXY) sits at 97.39, slipping from Monday’s high of 97.78 after dovish commentary from Fed officials, while expectations for Powell’s upcoming remarks on Tuesday dominate sentiment. Futures markets are pricing a 90% probability of a 25 bp cut in October and nearly an 80% chance of another cut in December, keeping pressure on the greenback despite mixed internal Fed views.

Divergent Fed Signals Keep Dollar Volatile

Federal Reserve officials have split sharply, leaving markets without a clear anchor. Atlanta Fed’s Raphael Bostic and Cleveland Fed’s Beth Hammack warned against rushing into more easing, citing sticky inflation risks. St. Louis Fed’s Alberto Musalem backed last week’s cut as a labor market safeguard but stressed “limited room” for more reductions. By contrast, Governor Stephen Miran pushed for an immediate 50 bp cut, calling current policy excessively restrictive with the neutral rate closer to 2%. This policy divide leaves the dollar exposed to each new data point, reinforcing volatility in EUR/USD.

Eurozone PMI Data Highlights Manufacturing Strain

Fresh Eurozone PMI readings underscore an uneven recovery. The manufacturing index fell deeper into contraction at 45.9, while services provided some relief at 50.5, keeping the composite index just above 48. Germany’s data showed similar divergence, while French PMIs contracted across both sectors, raising concerns about Europe’s second-largest economy. Despite this, Eurozone consumer confidence improved to -14.9 in September, beating August’s -15.5, hinting that sentiment may be stabilizing. For EUR/USD, the resilience in services helps prevent a sharper breakdown below 1.1775, but structural headwinds remain.

U.S. Data and Treasury Yields in Focus

The U.S. side offers a mixed picture. PMI readings are due Tuesday and could tilt market expectations quickly. Consensus forecasts U.S. GDP growth at 3.3% annualized for Thursday’s release, while Friday’s core PCE inflation is expected to hold at 2.6% YoY, the Fed’s preferred measure. The 10-year Treasury yield at 4.12% reflects anticipation of Powell’s direction, with traders wary of a hawkish pushback that could reignite dollar strength. A softer tone from Powell would likely send EUR/USD through 1.1820 resistance, opening a move toward 1.1874–1.1918, while hawkish signals could drag the pair back toward 1.1726 support. 

Technical Picture: Neutral but Skewed Bullish

On the charts, EUR/USD is consolidating above its 50-EMA at 1.1770 and 200-EMA at 1.1705, maintaining a slight bullish bias. RSI sits near 52, reflecting balanced momentum but leaning toward the upside. Immediate resistance is layered at 1.1820 and 1.1875, while support rests at 1.1775 and 1.1700. A break below 1.1700 exposes 1.1650, while a sustained close above 1.1830 would confirm bullish continuation. Traders remain locked on Powell’s Tuesday speech as the deciding catalyst for a breakout.

Strategic Positioning Ahead of Powell

Liquidity is shifting toward safety ahead of Powell’s remarks, with speculative euro longs increasing as the dollar softens. The DXY’s decline to 97.31 reflects a market that doubts the Fed’s hawkish rhetoric will translate into action. Meanwhile, euro demand is partly supported by geopolitical factors — EU leaders highlighted Russian airspace violations as a regional risk, but this has yet to weigh materially on the currency. The balance of risks shows traders willing to bid EUR/USD higher into key events.

Buy, Sell, or Hold Verdict

Given the combination of Eurozone resilience in services, U.S. yields capped at 4.12%, and a 90% probability of another Fed cut, the bias is bullish on EUR/USD in the near term. The pair remains a Buy on dips toward 1.1775, with upside targets at 1.1850 and 1.1918 ahead of Powell’s remarks and Friday’s PCE print. The medium-term risk remains tied to Eurozone structural weakness, but for now, liquidity and positioning tilt the trade in favor of euro strength.

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