EUR/USD Price Forecast - Eurp Drops to $1.1600 as Dollar Tightens Grip and Fed Repricing Hits Hard

EUR/USD Breaks Down Toward $1.157 As Dollar Strength Tightens And Fed Expectations Flip Into A New Hawkish Trajectory

EUR/USD entered Monday under accelerating pressure, sliding back toward $1.1600 and repeatedly failing to reclaim $1.1660, the 50-day EMA that capped every bullish attempt through November. The pair’s rejection from $1.1670 last week triggered a sharp unwind, dragging the euro toward the $1.1575–$1.1570 demand band, a level defended multiple times this year but now exposed as sellers escalate control. The U.S. Dollar Index’s jump toward $99.40 removed any breathing room for EUR/USD, pressuring spot into levels not seen since early November. Every bounce into $1.1620–$1.1640 is being treated as a selling opportunity as rate-cut optimism collapses from 67% last week to 46% for December.

Fed Repricing Shifts The Entire EUR/USD Curve As Markets Respond To Schmid And Musalem Warning That Rate Cuts Are “Limited And Risky”

The entire euro-dollar structure recalibrated after multiple Fed officials dismantled expectations of aggressive easing. Kansas City Fed President Jeffrey Schmid insisted the central bank must continue to “lean against demand growth,” while St. Louis Fed President Musalem warned that policy is only “close to neutral,” not ready to support early cuts. Traders dumped euro longs immediately, sending EUR/USD spiraling from the $1.1655 spike toward the $1.1600 floor. The broader U.S. front-end saw the 2-year Treasury drop to 3.60%, with the 10-year sliding to 4.14%, highlighting cautious bond flows that still favor the dollar as long as inflation uncertainty remains unresolved. For EUR/USD, this means the path of least resistance continues pointing lower until the macro fog lifts around delayed U.S. labor and inflation releases.

Trend Compression Deepens As EUR/USD Fails To Reenter The November Channel And Sellers Push Below The Mid-Band Trigger At $1.162

The technical picture shows a pair unable to regain its prior November channel. The failed breakout above the descending trend boundary earlier this month now acts as a firm rejection point, with price pinned under both the 20-day EMA at $1.162 and the 50-day EMA at $1.166. Momentum indicators echo this shift. The Parabolic SAR flipped above price action again, confirming bearish pressure, and the RSI continues to reject mid-range recovery attempts. Fibonacci levels tell the same story: EUR/USD could not sustain the 0.618 retracement near $1.165, and the failure sent spot back toward the 0.5 and 0.382 zones, leaving $1.157 as the last structural support before the market opens space toward $1.1500 and the early-August swing at $1.1470.

European Policy Stability Limits Panic Selling But Provides No Catalyst As EUR/USD Awaits The First Real Data After The Shutdown

The euro’s downside remains cushioned by broad expectations that the ECB will maintain its deposit rate through 2026, offering stability but no upward momentum. Investors know the ECB cannot meaningfully pivot as long as Eurozone price stability holds above target and wage dynamics remain tight. Meanwhile, U.S. data scarcity following the government shutdown created a vacuum where positioning dominates price action. With the September nonfarm payrolls now set for release on November 20 and October PCE inflation arriving the following week, EUR/USD is trapped in a holding pattern where U.S. data—not Eurozone policy—dictates every move. Traders remember that Thursday’s NFP is the first major U.S. economic snapshot in 43 days, making the reaction especially volatile for EUR/USD liquidity.

Dollar Strength Broadens Across Majors While EUR/USD Suffers The Sharpest Relative Pressure As The Heat Map Turns Red Against USD

The currency heat map showed the USD gaining 0.17% against the euro, outpacing its moves against the pound (0.14%) and the franc (0.11%). This broad USD bid confirms the euro’s relative vulnerability. The dollar’s climb came even as U.S. yields eased slightly, reinforcing that rate-cut repricing—not risk appetite—is the primary force. EUR/USD is now aligned with the weakest FX performers of the day, failing to attract dip-buyers despite sitting near its multi-week support cluster at $1.157–$1.160. Buyers are staying sidelined until the macro picture clarifies, a dynamic that continues to push liquidity toward USD-favored trades.

EUR/USD Trading Psychology Turns Defensive As Bulls Withdraw And Bearish Conviction Deepens Into Key Seasonal Macro Releases

The psychological structure behind EUR/USD turned decisively defensive this week. Thursday’s rejection at $1.1655 and the inability to even test $1.1685—the upper boundary watched by multiple models—sent a clear message: bullish conviction has evaporated. Instead, traders are consolidating short exposure near $1.1620, waiting for confirmation of a break toward $1.157. Options desks report heavier positioning around $1.1500, signaling markets preparing for continuation if key U.S. labor or inflation numbers beat expectations. Short-term momentum now treats any rebound above $1.162–$1.164 as corrective, not trend-shifting.

Structural Levels To Watch: $1.157 Support, $1.1500 Break Trigger, $1.1660 Recovery Line, $1.1700 Sentiment Pivot

The structure is clear. A drop below $1.157 activates accelerated selling toward $1.1500, which aligns with the 78.6% retracement of the autumn rally and the most important psychological mark of Q4. Below that sits the early-August floor at $1.1470, the level that would confirm a full trend reversal. On the other side of the chart, buyers cannot regain control until EUR/USD clears $1.1660, the 50-day EMA. A breakout above $1.1700 would shift sentiment meaningfully, opening the path to $1.1730, $1.1760, and the summer ceiling at $1.1800–$1.1820. As long as the pair remains below these thresholds, bearish bias dominates.

Verdict: EUR/USD Holds A Bearish Bias With A Sell Outlook Until The Pair Reclaims $1.1660 And Breaks $1.1700 With Conviction

EUR/USD remains in a SELL posture. The combination of a stronger dollar, collapsing Fed-cut expectations, failed attempts to reclaim both 20-day and 50-day EMAs, and a compressed macro calendar that favors USD volatility keeps the euro at a disadvantage. The pair must hold $1.157 to avoid a slide toward $1.1500, but upside remains capped unless buyers reclaim $1.1660 and push decisively above $1.1700.

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