Insights 
VT 
The Euro (EUR) has seen a sharp rebound with potential for further gains but is not expected to reach 1.1655. The chance of the Euro reaching 1.1490 during this period of weakness is reducing, as noted by UOB Group’s FX analysts.
In the short term, the Euro fell to 1.1541, but later unexpectedly rebounded to a high of 1.1630 during the New York session. Although the rebound may continue, it is not enough to hit 1.1655, with support levels identified at 1.1585 and 1.1560.
Over a 1-3 week period, the outlook for the Euro has been negative, predicted to decline towards 1.1490. A strong rebound followed, with the Euro rising to 1.1630 and closing at 1.1618, marking a 0.48% increase. The downward momentum is slowing, and the likelihood of reaching 1.1490 is decreasing. A breach of 1.1655 would indicate stabilisation of this weakness.
We are looking back at an analysis from October 2021, when the Euro experienced a sharp, unexpected rebound after a period of weakness. The thinking at the time was that while EUR/USD could climb further, it was unlikely to break the strong resistance at 1.1655. As of today, October 13, 2025, the pair trades in a very different macroeconomic environment, making this historical perspective useful for assessing current market character.
Today, the interest rate differential remains a key factor, with the European Central Bank’s main rate at 3.5% compared to the U.S. Federal Reserve’s 4.75%. This gap continues to favor holding U.S. dollars over Euros, limiting the potential for a sustained rally. Recent data showing Eurozone inflation holding at 2.5% provides little incentive for the ECB to consider rate hikes, unlike the situation in the United States where core inflation is slightly more persistent at 2.8%.
For derivative traders, this suggests that strategies capitalizing on limited upside potential are prudent. Selling out-of-the-money call options or implementing bear call spreads with a strike price well above the current spot price, perhaps around the 1.0900 level, could be effective. This approach allows traders to collect premium based on the view that fundamental pressures will cap any significant upward movement in the coming weeks.
We remember that after the rebound in October 2021, the EUR/USD pair did indeed fail to overcome that resistance and began a prolonged decline, eventually breaking below parity in 2022. That historical price action serves as a reminder that short-term bounces often fizzle out when they are not supported by fundamental shifts. Therefore, any bullish positions should be considered tactical and managed with caution, as the broader trend may not have reversed.
