Insights 
VT 
The Euro (EUR) may dip below last week’s low of 1.1540, though a lasting drop beyond this level is unlikely. Analysts from UOB Group, Quek Ser Leang and Peter Chia, suggest the probability of the Euro reaching 1.1490 in this period of weakness is decreasing.
In the short term, after earlier predictions that the Euro could rebound to 1.1655, the currency instead reached a low of 1.1556. Downward momentum is growing but not strongly enough to maintain levels below 1.1540, and major support at 1.1490 seems out of reach. Resistance is identified at 1.1580, with a breach of 1.1600 indicating a reduction in downward pressure.
Euro Long Term Outlook
Over a 1-3 weeks outlook, the negative outlook persists, with an initial suggestion of a further decline towards 1.1490, yet the likelihood of reaching that point is reducing. A breach of the 1.1645 level, previously pegged at 1.1655, would signal that the Euro’s weakness has stabilised since last week. The information is shared by commercial and internal analysts selected by FXStreet Insights Team.
Our view from last week was that EUR/USD could dip below 1.1540, but we noted that downward momentum was fading. The chance of the pair reaching the major support at 1.1490 was already seen as decreasing. This created a cautious but still bearish outlook for the currency pair.
However, new data released this morning has shifted this perspective significantly. The flash Eurozone CPI for September came in hotter than expected at 3.1%, beating the consensus forecast of 2.8%. This surprise inflation reading puts pressure on the European Central Bank to reconsider its dovish stance, providing a strong tailwind for the Euro.
At the same time, recent figures from the US have pointed to a slight cooling in the economy. Last week’s initial jobless claims ticked up to 220,000, and retail sales data from August 2025 showed a modest slowdown. This divergence in economic surprises supports a stronger Euro relative to the Dollar for now.
Implications For Derivative Traders
For derivative traders, this means the risk has shifted to the upside, and the strong resistance level of 1.1645 is now a key target. Buying near-term call options with a strike price around 1.1650 could be a viable strategy to capture a potential breakout. The original idea of a dip below 1.1540 now looks far less likely in the coming weeks.
We remember the sharp reversals in EUR/USD during the 2023 policy pivot, where the pair moved several hundred pips in a matter of weeks on changing inflation narratives. Implied volatility has picked up to 8.5% from last month’s low of 7.2%, suggesting the market is pricing in larger price swings. Therefore, traders should consider using strategies like bull call spreads to define risk in case the sentiment shifts once again.
