Insights 
VT 
The Euro (EUR) could potentially test the 1.1580 mark, though a prolonged drop below this point is unlikely. According to analysts from UOB Group, the Euro is expected to trade with a downward bias over the long term, possibly retesting the 1.1540 level.
In the short term, the previous trading session saw the Euro drop to a low of 1.1597, contradicting earlier predictions that it would not fall significantly below 1.1625. For today, it might test 1.1580, yet a sustained decline beyond this remains improbable. Resistance levels for the Euro are noted at 1.1620 and 1.1640.
Euro Short Term Outlook
Looking at the next one to three weeks, earlier predictions suggested a range-bound movement between 1.1580 and 1.1690. However, the Euro unexpectedly fell to 1.1597 in the late New York session. The expectation is for the Euro to maintain a downward trajectory, potentially revisiting last week’s low of 1.1540, as long as the 1.1660 resistance level is not surpassed.
Given the building downward momentum, we see the EUR/USD pair trading with a downward bias in the coming weeks. The expectation is for a potential retest of the 1.1540 support level. This view will hold as long as the price remains below the strong resistance at 1.1660.
This bearish outlook is strengthened by recent economic data divergence. Eurostat’s flash estimate for September 2025 showed Eurozone inflation unexpectedly dipping to 1.9%, while last week’s US CPI figures remained stubbornly above target at 3.5%. This reinforces the narrative of a dovish European Central Bank contrasting with a hawkish Federal Reserve.
Trading Strategies
The dynamic is reminiscent of what we observed back in 2022, when aggressive Fed rate hikes sent the dollar soaring against the euro. With recent commentary from Fed officials suggesting a “higher for longer” policy stance to combat inflation, conditions appear ripe for a similar, though less extreme, trend. Therefore, the path of least resistance for the EUR/USD appears to be downwards.
For traders, this suggests positioning for further declines using options. Buying put options with a strike price at or below 1.1580 could be a straightforward way to capitalize on the expected move towards 1.1540. This strategy allows for a defined risk, limited to the premium paid for the option.
Alternatively, a bear put spread could be considered to lower the initial cost. This would involve buying a put option, for instance at 1.1580, and simultaneously selling another put at a lower strike, like 1.1540. The key is to watch the 1.1660 resistance level, as a break above it would invalidate this bearish setup.
