Insights 
VT 
The Euro has dipped below 1.1500 against the US Dollar, reversing prior gains amid a risk-averse market atmosphere and Fed rate expectations. Over the last five trading days, EUR/USD has fallen by about 1.5%, with the US Dollar gaining strength due to Fed hawkishness and a dismal market sentiment.
US Manufacturing Sector and Fed Officials
The US Dollar’s resilience was undeterred by a continued contraction in the US manufacturing sector, with October’s ISM Manufacturing PMI recording its eighth monthly decline. Federal Reserve officials are divided on future policy, with some advocating for caution due to high inflation, while others argue current policies are too restrictive.
In Europe, ECB President Christine Lagarde’s upcoming speech is not expected to provide fresh insights on monetary policy. Key US data will be absent due to a government shutdown, but markets are anticipating Wednesday’s ADP Employment report. Futures markets have decreased the likelihood of a December rate cut to 67% from 90%, supporting US Treasury yields and maintaining US Dollar strength.
EUR/USD is finding resistance below 1.1530 after an unsuccessful attempt to stabilize above this level. If EUR/USD stays below 1.1500, it could move towards 1.1450, while to the upside, surpassing 1.1500 could shift focus to 1.1530 and beyond.
As of November 4, 2025, we are seeing the EUR/USD pair under significant pressure, currently trading near the 1.0750 mark. The market mood is decidedly risk-averse, pushing capital towards the safety of the US Dollar, a dynamic we have seen many times before. This environment suggests that any rallies in the Euro are likely to be short-lived selling opportunities.
Driving Factors and Technical Levels
A key factor driving this is the growing divergence in monetary policy between the European Central Bank and the US Federal Reserve. With the latest flash estimates for October 2025 showing Eurozone inflation cooling to 2.4%, the ECB is facing more pressure to consider rate cuts early next year. Meanwhile, US core inflation has remained stubbornly above 3%, giving the Fed reason to maintain its “higher for longer” stance.
We are now looking ahead to this Friday’s US Non-Farm Payrolls report for further clues on the economy’s strength. The October 2025 report showed a resilient labor market, adding a solid 170,000 jobs, which continues to support the case for a hawkish Fed. A similar strong reading would likely reinforce dollar strength and push the EUR/USD lower.
For derivative traders, this situation is increasing implied volatility in EUR/USD options contracts. The uncertainty surrounding future central bank moves means markets are pricing in the potential for larger price swings. This suggests that strategies that profit from volatility, rather than a specific direction, could be worth considering in the weeks ahead.
The key technical level to watch is the 1.0700 support area. A firm break below this psychological mark could open a path toward the year-to-date lows we saw in September 2025, around 1.0630. To invalidate the current bearish view, we would need to see a convincing move back above the resistance at 1.0820.
