Bearish Momentum Builds as EURUSD Struggles to Sustain Its Recovery

Central Bank

Economic

Summary:

With the signal lines already moving into bearish territory, the technical indicators increasingly favor further declines, leaving the path of least resistance tilted to the downside.

SELL EURUSD

EXP

PENDING

1.12000

Entry Price

1.10600

1.12850

1.11683 -0.00045 -0.04%

Pips

PENDING

1.10600

Exit Price

1.12000

Entry Price

1.12850

Germany's IFO Business Climate Index improved to 90.2 in October, up from 89.9 in September and above market expectations of 89.8. However, the IFO Current Assessment Index declined to 88.8 from its previous reading of 89.5. In contrast, the Expectations Index, which provides an indication of how businesses assess the outlook for the next six months, increased to 91.6 from 90.4 in the previous report. The mixed figures suggest that while business expectations have improved, assessments of current economic conditions remain under pressure.

Meanwhile, credit rating agency Moody's maintained France's sovereign credit rating at Aa3 despite the country's rising debt burden and ongoing social unrest, which triggered mass protests across several major cities over the weekend. The decision was welcomed by financial markets, where investors had anticipated a possible downgrade. French 10-year government bond yields fell below the 5% level before giving back part of their gains during Monday's European trading session.

Geopolitical developments pushed oil prices lower amid reports that members of the Mecca Pact, including Iran, Turkey, Pakistan, and Saudi Arabia, had agreed to continue discussions. Meanwhile, speculation about a coordinated US-Israeli attack on Tehran persists after Iranian officials excluded nuclear negotiations from the pact's meeting.

On Wednesday, traders will focus on the Federal Reserve's interest rate decision. The central bank is expected to keep rates unchanged within the 3.75%–4.00% range. Meanwhile, the yield on the 10-year US Treasury note fell by 2 basis points to 4.978%, as investors continued to assess the Fed's next policy move. Market participants will also pay close attention to Fed Chair Kevin Warsh's press conference, where he could offer clues about the central bank's next steps, even if he refrains from providing explicit forward guidance.

The September Personal Consumption Expenditures (PCE) report is expected to confirm that inflationary pressures remain elevated in the United States. Core PCE is forecast to rise by 0.32% month over month and 3.1% year over year, while market-based core PCE is expected to increase by 0.34% month over month. Bearish Momentum Builds as EURUSD Struggles to Sustain Its Recovery_1

Bearish Momentum Builds as EURUSD Struggles to Sustain Its Recovery_1

Technical Analysis

EURUSD recovered after reaching a local low of 1.1114 on October 14, but the rebound has encountered dynamic resistance from the 100-period moving average, currently positioned at 1.1210. The 200-period moving average stands higher, at 1.1329, providing another potential resistance level if the recovery gains traction. The rejection at the 100-period moving average could allow the bearish movement to resume, with the pair potentially extending its decline toward the psychological level of 1.1060 if it breaks below the previous support. On the other hand, a decisive break and close above the descending trendline would weaken the bearish setup and change the current technical outlook.

Looking at the oscillators, the Relative Strength Index (RSI) is currently at 38, already in bearish territory. The indicator's recent recovery was limited to a high of 62, suggesting that buyers have lacked the strength needed to sustain a more extended upward movement. Meanwhile, the MACD continues to display a bearish histogram that has persisted and recently gained depth again, indicating renewed downside momentum. With the signal lines already moving into bearish territory, the technical indicators increasingly favor further declines, leaving the path of least resistance tilted to the downside.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1200

Target price: 1.1060

Stop loss: 1.1285

Validity: Nov 06, 2026 15:00:00

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Bearish Momentum Builds as EURUSD Struggles to Sustain Its Recovery

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