Insights 
VT 
Potential Euro Decline Below Support
The Euro (EUR) may face a drop below 1.1645. Given current conditions, even though further decline might not reach 1.1610, the risk for EUR remains elevated. If it clearly breaks below 1.1645, the next target could be the support at 1.1610, according to UOB Group analysts.
In the past 24 hours, EUR’s predicted range of 1.1690/1.1730 did not hold, as it fell to 1.1647, closing at 1.1655, a decrease of 0.46%. While oversold, it might drop under 1.1645, though further decline may not touch 1.1610. To keep the momentum, EUR needs to stay below 1.1690 with a lesser resistance noted at 1.1675.
In the next 1-3 weeks, EUR has tested the 1.1645 support earlier than expected, with the potential of further decline. Breaking and holding below 1.1645 suggests it could target the 1.1610 support. However, surpassing 1.1720 would reduce the risk of further decline, as the strong resistance was set at 1.1755 previously.
Given the increased downside risk for the Euro, we should prepare for a potential drop below the 1.1645 support level in the coming weeks. The downward momentum accelerated faster than we anticipated, suggesting underlying weakness is significant. This view is reinforced by recent data showing a divergence between the US and Eurozone economies.
The latest US jobs report from last Friday, October 3, 2025, showed stronger-than-expected payroll growth, adding fuel to the dollar’s strength. In contrast, flash manufacturing PMI data from the Eurozone last week pointed to a continued slowdown, particularly in Germany. This fundamental backdrop supports a weaker Euro relative to the dollar.
Monetary Policy Divergence Between US and Eurozone
Federal Reserve officials have also maintained a hawkish tone, hinting at the possibility of another rate hike before the end of 2025 to combat inflation, which ticked up to 3.4% in the last report. Meanwhile, the European Central Bank has signaled it will likely hold rates steady amid concerns over sluggish economic growth. This policy difference makes holding dollars more attractive than euros.
For traders using derivatives, buying put options with a strike price around 1.1600 could be a viable strategy to profit from a break of the next support level. This provides direct exposure to the downside while defining the maximum risk to the premium paid. The position should be considered for expiration in late October or November to allow time for the move to develop.
Considering the market is currently oversold, a short-term bounce is possible, making outright shorting risky. A bear put spread, such as buying a 1.1650 put and selling a 1.1550 put, could be a more conservative approach. This strategy would lower the initial cost and still profit if the Euro weakens, albeit with a capped gain.
We have seen similar periods of sustained dollar strength in the past, particularly during the rate hike cycle of 2022-2023 when the pair broke below parity. While we are not forecasting such a dramatic move, historical precedent shows that once a key technical level breaks, the follow-through can be swift. Therefore, we should view any rallies toward the 1.1720 resistance as opportunities to position for further weakness.
