EUR/USD met fresh supply in Thursday’s Asian session, checking Wednesday’s modest rebound from the 1.1110 area, its lowest level since May 2025, as US Dollar buying resurfaced. Even so, the move lacked traction, with positioning subdued ahead of the European Central Bank policy decision and a run of US releases.
The ECB is expected to keep rates unchanged while retaining a hawkish bias towards a possible 25-bps hike in December, but worries over France’s rising debt burden and political gridlock before next year’s election remain a drag on the euro. The dollar stayed supported by hawkish Federal Reserve expectations and geopolitical uncertainty. Technically, EUR/USD remains bearish below the 100-period EMA on the four-hour chart, with RSI near 40.2 despite MACD turning slightly positive. Attention sits on a break under 1.1115–1.1110, while 1.1140 is watched intraday; resistance is seen near 1.1200 and then the 100-period EMA at 1.1215.
Bearish Bias on EUR/USD Strategies
We suggest keeping a clear bearish tilt on EUR/USD options and futures over the next few weeks, as the downward momentum remains dominant. Traders should hold off on fresh short positions until we see a decisive break below the critical 1.1110 support zone. Historical price action shows that falling below key multi-month lows often triggers automated selling and unwinding of long positions.
Central Bank Policies and Technical Triggers
We need to closely watch central bank policies and economic data, as the Federal Reserve maintains a more hawkish stance compared to European monetary policy. France’s mounting national debt, which sits above 112% of its GDP, alongside budget gridlock ahead of upcoming elections, continues to weigh heavily on the euro. Historical data from past European debt worries demonstrates how political uncertainty in major bloc economies caps euro rallies very quickly.
If prices experience a temporary bounce toward 1.1140 or 1.1200, we recommend treating these rallies as potential selling opportunities rather than trend reversals. The technical resistance near 1.1215 serves as our major line in the sand, meaning any sustained move above it would force us to step back and rethink downside targets. Utilizing put options with strike prices just below 1.1100 allows derivative traders to capture downside potential while capping risk.
With momentum metrics like the Relative Strength Index hovering near 40, market conditions reflect weak buying interest despite minor upticks in short-term indicators. Traders utilizing leveraged products must remain disciplined, setting tight stop-loss orders above key resistance levels to manage expected volatility around news events. In the weeks ahead, positioning for a leg lower remains the cleanest approach while these fundamental and technical headwinds persist.
