The Euro (EUR) is under pressure at the start of the week, retreating below the 1.1600 mark against the US Dollar (USD) as investor sentiment turns cautious. At the time of writing, EUR/USD trades near 1.1590, erasing previous gains and turning negative on the daily chart.
Key Drivers: Trade War Fears & French Political Instability
- Global Risk Aversion: Renewed concerns about a possible US-China trade war are denting global risk appetite. This comes after President Trump threatened to impose 100% tariffs on Chinese imports starting November 1, in response to China’s new restrictions on rare earth exports. While Trump later softened his stance on social media, uncertainty remains high.
- French Political Tensions: In Europe, investors are focused on ongoing political instability in France. President Macron has reappointed Sébastien Lecornu as Prime Minister just one week after his resignation. His newly appointed Finance Minister, Roland Lescure, now faces the uphill task of passing a tough, austerity-driven budget—adding pressure on the Euro.
Thin Liquidity Expected
With US markets closed for the Columbus Day holiday, trading volumes are expected to be lighter. The focus now shifts to key central bank commentary, including speeches from ECB President Christine Lagarde and other global policymakers at the IMF/World Bank annual meetings in Washington.
Technical Outlook: EUR/USD Under Bearish Pressure
The technical picture shows EUR/USD struggling to hold above 1.1600, with signs of renewed downside momentum:
- RSI on the 4-hour chart remains below 50, signaling weakness.
- MACD has started to turn lower, suggesting Friday’s rebound is losing steam.
Key Levels:
- Support: Immediate support at 1.1590, followed by deeper levels at 1.1525 (base of descending channel).
- Resistance: Initial resistance at 1.1630, followed by stronger barriers at 1.1690, then 1.1720–1.1730 (October 6 highs).
A confirmed break below 1.1590 could open the path toward October 9–10 lows, while a move above 1.1630 would be needed to ease the downside bias.
Euro Performance Snapshot
Here’s how the Euro is performing against major currencies today:
| Base / Quote | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| EUR | -0.33% | -0.24% | -0.23% | -0.28% | -0.26% | -0.03% | -0.06% |
- EUR is weakest vs the USD and GBP
- It is holding relatively firm against the NZD, reflecting overall defensive trading
Outlook: Caution Ahead of Key Events
With trade tensions brewing and political risks in Europe rising, EUR/USD is likely to remain under pressure in the short term. Market participants will closely monitor:
- Developments in US-China trade negotiations
- Political clarity in France
- Guidance from central bankers at the IMF meetings
Until there’s more clarity, the Euro may struggle to gain meaningful traction.