1 October 2025,03:39
Daily Market Analysis
1 October 2025, 03:39
*ECB steady, Fed uncertain: Lagarde downplays inflation risks, while U.S. faces fiscal gridlock and softer data.
*Dollar on the back foot: Weak U.S. consumer confidence and cooling hiring erode dollar demand.
*CPI in focus: Eurozone inflation release could set near-term EUR/USD direction.
Market Summary:
The Euro extended its advance against the dollar, supported by relative resilience in the Eurozone and ongoing dysfunction in Washington. ECB President Christine Lagarde reiterated that inflation risks remain “quite contained,” reducing pressure for immediate easing, while ECB policymaker Olli Rehn urged stronger action to secure the euro’s role as a global “anchor of stability.” These comments, alongside firmer preliminary inflation data from major economies, have helped the euro consolidate near recent highs.
Transatlantic divergence remains the key driver. The U.S. faces the risk of a government shutdown that could delay critical economic releases like Nonfarm Payrolls, complicating the Fed’s data-dependent approach and weakening the dollar’s safe-haven appeal. By contrast, the ECB appears less constrained by fiscal politics, prompting several institutions to raise EUR/USD targets, with some eyeing 1.22 in the months ahead.
Dollar weakness was further reinforced by softer U.S. macro data. While JOLTS Job Openings edged higher, hiring fell to its lowest in over a year, and consumer confidence dropped more than expected, pointing to household pessimism. Fed officials have acknowledged signs of a cooling economy but continue to emphasize a “modestly restrictive” stance, leaving markets uncertain over the pace of easing and opening space for euro strength.
The immediate focus now turns to Eurozone CPI due later today. A stronger print, particularly in core inflation, would support the case for the ECB to hold steady and could lift EUR/USD toward fresh highs. A weaker reading may revive easing expectations and cap upside momentum, but with U.S. fiscal risks unresolved, dips in the euro are still likely to attract strong buying interest.
Technical Analysis
EURUSD, H4:
EURUSD has rebounded from the 1.1690 support area and is currently consolidating around the 1.1715–1.1745 zone, testing resistance along its rising channel structure. The pair remains caught between firm support at 1.1715 and upside resistance near 1.1800, with a decisive breakout likely to dictate the next directional move.
RSI stands at 51, signaling neutral momentum with neither overbought nor oversold conditions. MACD is flat near the zero line, with only a modest bullish crossover developing, suggesting that momentum remains tentative and vulnerable to swings in U.S. dollar sentiment.
Overall, the pair’s short-term bias leans cautiously bullish within the ascending channel, but the lack of strong momentum indicators points to consolidation. Traders will look to the 1.1715–1.1800 band as the pivotal range for confirmation, with macro catalysts such as U.S. fiscal uncertainty and the upcoming Eurozone prints likely to provide the breakout trigger.
Resistance level: 1.1800, 1.1900
Support level: 1.1690, 1.1585
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