3 October 2025,06:02
Daily Market Analysis
3 October 2025, 06:02
*Eurozone unemployment rose to 6.3% in August, the highest this year, complicating ECB’s policy outlook amid slowing growth.
*Global political instability, including U.S. shutdown risks and Japan’s leadership transition, has boosted demand for euro assets.
*Upcoming inflation and GDP figures will be pivotal; solid readings could reinforce resilience, while further weakness may pressure ECB policy.
The euro has demonstrated relative strength against G7 peers in recent sessions, though it faced moderate headwinds following the release of eurozone unemployment data. The jobless rate rose to 6.3% in August, exceeding the consensus forecast of 6.2% and reaching its highest level this year. This deterioration in labor market conditions introduces potential complications for the European Central Bank’s policy trajectory, particularly as policymakers balance inflation concerns against signs of economic softening.
Despite this near-term challenge, the euro’s broader outlook remains supported by its role as an alternative reserve currency amid global political instability. Ongoing political drama in the United States surrounding the government shutdown, combined with political transition uncertainty in Japan as the ruling party selects a new leader, has heightened demand for euro-denominated assets as investors seek diversification.
The currency’s near-term direction will likely be determined by upcoming economic releases, particularly inflation data and third-quarter GDP figures. Satisfactory readings in these reports would help stabilize expectations for ECB policy and potentially reinforce the euro’s recent resilience. However, should data continue to signal economic weakness, the central bank may face increased pressure to maintain or even enhance accommodative measures.
The euro’s ability to withstand domestic headwinds while capitalizing on global uncertainties underscores its evolving role in currency markets. While the unemployment uptick presents a moderate negative, the broader fundamental backdrop continues to provide underlying support that may limit significant depreciation in the medium term.
The EUR/GBP pair maintains a constructive technical structure characterized by a pattern of higher lows, though its advance has been contained by significant resistance at the 0.8742 level. The pair retreated 0.35% after testing this barrier but has demonstrated resilience by finding firm support above the critical short-term level at 0.8700 and rebounding from this zone.
The ability to defend the 0.8700 support is technically significant, suggesting underlying bullish momentum remains intact despite the recent rejection at higher levels. A decisive break above 0.8742 would confirm a bullish breakout and likely open the path toward the next resistance zone near 0.8780.
Momentum indicators are showing early signs of stabilization. The Relative Strength Index is rebounding from near oversold territory, indicating a reduction in selling pressure, while the Moving Average Convergence Divergence, though trading below its zero line, is exhibiting signs of potential bullish convergence. This configuration suggests that the recent corrective phase may be concluding.
Resistance Levels: 0.8742, 0.8880
Support Levels: 0.8610, 0.8510
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