EUR/USD Trends

EUR/USD is experiencing challenges with the pair trading below 1.1560, after testing a two-month low of 1.1542. A risk-off sentiment prevails as US-China trade tensions rise due to both countries increasing fees on each other’s vessels.

Market focus is on Federal Reserve Chairman Jerome Powell’s conference, but without substantial data, markets anticipate two interest rate cuts from the Fed in upcoming meetings. The Euro remains under pressure, with technical indicators suggesting bearish momentum.

German ZEW Economic Sentiment for October improved to 39.3 from 37.3 but fell short of market expectations. The Current Situation Index declined to -80.0 from -76.4, contrary to expectations of an improvement. German inflation figures showed a year-on-year increase to 2.4% in September.

The Eurozone Economic Sentiment Index fell to 22.7 from 26.1 against expectations of a rise. Trade tensions are heightened as China imposes restrictions on rare earth exports, responding to which, the US plans higher levies on Chinese imports from November 1.

Impact of Market Dynamics

The US Dollar could be influenced by Powell’s comments, with no new key data releases. Support for EUR/USD is at the 1.1542 level, with further resistance and support levels cited, maintaining a cautious outlook for the currency pair.

Given the current market on October 14, 2025, we see the EUR/USD pair remaining under significant pressure. Renewed trade tensions between the US and China are pushing capital towards the safe-haven US Dollar, keeping the Euro pinned below the key 1.1600 level. This risk-off sentiment is the dominant theme, and any small rallies in the Euro are being met with selling pressure.

The economic weakness in Europe, particularly Germany, is a major factor weighing on the currency. The latest ZEW economic sentiment data has disappointed, and this follows recent Destatis figures from September 2025 showing German industrial production contracting by 0.6%, a trend that reminds us of the economic struggles seen back in 2022-2023. With German inflation ticking up to 2.4%, the European Central Bank is caught in a difficult position, unable to stimulate a flagging economy without fueling further price rises.

All eyes are now on Federal Reserve Chairman Powell’s upcoming speech, with markets widely expecting two more interest rate cuts before year-end. This expectation is supported by recent data showing US job growth slowing, with the last Non-Farm Payrolls report adding a weaker-than-expected 160,000 jobs. Despite the prospect of lower US rates, the dollar remains strong because the economic outlook in Europe is deteriorating at a faster pace.

For derivative traders, this environment suggests that volatility could increase in the coming weeks. We’ve already seen the VIX, a key measure of market fear, creep up from its recent lows to over 18, indicating that investors are buying protection against unexpected moves. Traders should consider using options strategies like straddles or strangles if they anticipate a sharp move after Powell’s comments but are unsure of the direction.

Based on the bearish momentum, selling futures contracts on rallies toward the 1.1600 resistance level appears to be a viable strategy. Alternatively, buying put options with strike prices below 1.1550 would provide downside exposure while limiting risk to the premium paid. This approach allows traders to profit from a continued decline in the EUR/USD pair.

Trading Strategies

We must watch the immediate support level at 1.1542 very closely, as a break below this could accelerate the decline. The next targets for bearish positions would be the 1.1530 low and then the descending channel base around 1.1525. Any failure to break these levels might signal a temporary pause in the downward trend, offering a chance to reassess positions.

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