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The EUR/USD currency pair traded calmly on Tuesday, still within the same descending channel. Over the past month, trading days in the FX market have blurred into one. It is now very difficult to separate individual events, sessions, news and releases. The dollar can start rising at any moment and, just as easily, with no link to any events or time periods, begin to correct. But "correct" is a grand word. In reality, the pair hasn't corrected in a month, apart from small pullbacks and plain stagnation. Last week there was no major news, and this week there is none either. Yet the dollar keeps quietly appreciating.
In principle, we've been saying the same thing for several weeks. Causes and explanations can be obvious — you can invent them or pick the ones you need from a general list. If the Nonfarm Payrolls report prints weak and the dollar falls, everything is logical and obvious; you don't need to hunt for or invent a reason. If Kevin Warsh says inflation must be fought and the dollar rises in response, the reason is also clear. Typically, any event provokes a market reaction for at most 24 hours. If the event occurred long ago and the move continues, then it is unrelated. In short, we do not believe there is any connection right now between rising yields in US or European bonds, the geopolitical picture, macroeconomic reports, fundamental events, and moves in the EUR/USD pair.
In our view, we continue to see classic technical, speculative, and inertia-driven movement. In other words, the dollar rises because it is being bought. And it is being bought because it rises. A closed loop. This movement will end only when sellers start taking profits on open positions. When that will happen is impossible to predict. Even technical references do not work now. For example, on the H4 chart, the CCI indicator has already tired of drawing "bullish" divergences and entering the oversold area. On the weekly timeframe, a downward correction against the 2025 uptrend continues. Price is currently approaching the 50.0% Fibonacci level, which could at least stop the current unexplained euro decline. Slightly below lies the Senkou Span B line, so together these levels could halt the illogical euro fall.
If the market intends to keep buying the dollar and selling the euro because the EU's energy independence is worse than that of the US or UK, or because Federal Reserve tightening somehow matters more than European Central Bank tightening to the extent that the euro cannot even show a correction, then the bad news is the pair could fall all the way to parity. Why not? What stops the market from continuing to dump the euro, using any pretext and ignoring all positive factors?
The average volatility of the EUR/USD currency pair over the last 5 trading days as of October 14 is 66 pips and is characterized as "average". We expect the pair to move between the levels 1.1127 and 1.1259 on Wednesday. The higher linear regression channel has turned down, indicating another trend change. The CCI indicator entered the oversold area three times and formed three bullish divergences, warning that the illogical downtrend may be ending. However, the market is not reacting to technical signals.
S1 – 1.1169
S2 – 1.1108
R1 – 1.1230
R2 – 1.1292
R3 – 1.1353
The EUR/USD pair continues to move downward, but we still view the pair's decline as a correction before a new uptrend. The global fundamental backdrop for the dollar remains negative, but in 2026, geopolitics and then the Federal Reserve's "hawkish" stance provided strong support for the US currency. With price below the moving average, short positions are possible, targeting 1.1127 and 1.1108. Above the moving average, long positions are relevant, with targets at 1.1292 and 1.1353.
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