The EUR/USD currency pair again showed no interesting movement on Friday. The entire past week was marked by a flat, low volatility. Even on the 4-hour timeframe, it is clear
The EUR/USD currency pair again showed no interesting movement on Friday. The entire past week was marked by a flat, low volatility. Even on the 4-hour timeframe, it is clear there have been virtually no moves in recent days. Therefore, there is little to analyze. We see no point in focusing on renewed riots and protests in France or dissecting the French budget crisis if these factors are not moving the pair. In our view, the market has long since priced in the negative news for the euro. Over the past month and a half, we observed an inertial move in the pair. The dollar rose largely not because of fundamentals or macro data — it rose because it was being bought. And it was bought because it was rising. In other words, we saw a purely speculative stretch of the trend with almost no corrections. Friday's PMIs for Germany, the euro area and the U.S. had no impact.
However, traders will not lack interesting events and information in the coming two weeks. The European Central Bank meeting is on Thursday and, although the outcome is already anticipated and the market ignored the last two rounds of tightening, it remains a key event. We do not rule out that holding key rates unchanged will produce no immediate reaction. Still, Christine Lagarde may adopt a more hawkish stance than before, as inflation is rising quite firmly in the euro area. The market already prices in four more policy tightenings in the eurozone. In our view, that is a strong reason for the euro to stop its illogical decline.
On the daily timeframe, a downtrend remains in place and is even supported by a descending channel. However, on the weekly timeframe, the longer-term uptrend that began in 2022 persists, so we still treat the current decline as a correction — a global correction. The movement that began in February of this year also looks corrective. Thus we believe we only need to wait for the correction to end.
The market still reacts poorly to euro-positive factors, but that is somewhat positive in itself. The more positive signals the market ignores now, the more factors it will have to account for later when the downtrend ends. Traders should only fear "black swans," which in recent years have arrived with alarming regularity. No one knows what surprises Donald Trump might plan over the remaining two years of his presidency—and he can deliver shocks that trigger market panic. No one can predict how events will unfold in 2027–2028, so that uncertainty could hypothetically support the dollar. Over the past year, investors have realized that sometimes it is safer to hold a "quiet haven."
The average volatility of the EUR/USD currency pair over the last 5 trading days as of October 26 is 50 pips, characterized as "average." We expect the pair to move between 1.1153 and 1.1253 on Monday. The higher linear-regression channel has turned down, indicating another trend change. The CCI entered the oversold area five times and formed four bullish divergences, warning that the illogical downtrend may be ending. However, the market has reacted weakly to technical signals so far.
S1 – 1.1169
S2 – 1.1108
R1 – 1.1230
R2 – 1.1292
R3 – 1.1353
The EUR/USD pair continues moving downward, but we still view the decline as a correction before a new uptrend. The global fundamental backdrop for the dollar remains negative, but in 2026, geopolitics and the Federal Reserve's hawkish stance provided strong support for the US currency. When the price is below the moving average, consider short positions with targets at 1.1169 and 1.1108. Above the moving average, long positions are relevant, with targets at 1.1292 and 1.1353.
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