The EUR/USD has seen a fourth consecutive day of increases, trading around 1.1720 as of Friday. This marks the best weekly performance for the currency pair in three months. Concerns over the ongoing US-China trade war, alongside indications that the Federal Reserve may cut interest rates twice in its next meetings, are putting downward pressure on the US dollar. Meanwhile, Europe is concentrating on the final Harmonized Consumer Price Index (HICP) for September.
Market tensions regarding the US-China trade conflict remain high. Recently, President Trump indicated that the trade war is already in effect, while Treasury Secretary Scott Bessent criticized Chinese negotiators for their lack of engagement during discussions in Washington.
Furthermore, comments from Fed Director Christopher Waller on Thursday expressed a preference for another interest rate cut in October. This sentiment was echoed by recently appointed Stephen Milan, who also emphasized the necessity for more significant rate reductions. Such views align with findings from the Fed’s Beige Book, which reported some economic decline, amplifying expectations for multiple rate cuts in the near future and subsequently increasing the pressure on the dollar.
Today’s economic highlights include the eurozone’s HICP, expected to show that price pressures intensified in September. Additionally, the Fed will publish its industrial production report before remarks from St. Louis Fed President Alberto Moussallem.
A daily digest that moves markets: Trade tensions, Fed cutbacks and US government shutdown hit USD
- The US dollar experienced its poorest week in several months, impacted by rising trade tensions between the US and China, signals from the Federal Reserve of prospective interest rate cuts, and uncertainties surrounding government funding, indicating a potential prolongation of the US government shutdown.
- This week, the Fed’s Beige Book suggested economic slowdown warnings as signs of weakened consumer spending and stagnation in the labor market emerged, making businesses apprehensive amid an uncertain economic landscape and the implications of higher tariffs.
- Current attention is on the euro region’s final HICP, which is anticipated to show an increase in consumer prices for September—expected to rise to 2.2% year-on-year from 2% in the previous month, providing support for core inflation, which has remained steady at an annualized rate of 2.3%.
- On Thursday, ECB President Pierre Bunsch indicated that prospects for further rate cuts were diminishing, while President Martin Kocher stated that the central bank was “at or very close to the end of the rate-cutting cycle.”
- In France, Prime Minister Sébastien Lecorne overcame two no-confidence votes, easing some worries about the political landscape and offering additional support for the euro. However, he still grapples with passing an austerity budget in a fragmented Congress by the year’s end.
Technical analysis: EUR/USD may find resistance at 1.1730
The EUR/USD has seen consistent gains, hitting its highest weekly performance since mid-July. It approached the double-bottom pattern target at 1.1730, and the 4-hour Relative Strength Index (RSI) signals a potential overbought condition, implying a possible pause or profit-taking on the unit.
A confirmation that surpasses the 1.1730 mark could pave the way toward the October 1 peak around 1.1780. If it continues to rise, the next target may be the September 23 high at 1.1820.
Conversely, a possible pullback from the current advances may challenge the countertrend line near 1.1665. If it falls below that, support levels around Thursday’s low of 1.1640, the 1.1600 mark, and the October 14 low at around 1.1545 could be in play.
Economic indicators
Core Harmonized Index of Consumer Prices (YoY)
The Harmonized Core Index of Consumer Prices (HICP) tracks changes in the prices of a selection of goods and services throughout the European Monetary Union. Released monthly, it gives a year-over-year comparison with prior periods, excluding volatile components like food and energy. Increased figures are often seen as promising for the euro, while lower numbers may signal trouble.
Next release: Friday, October 17, 2025 09:00
Frequency: Monthly
Consensus: 2.3%
Previous: 2.3%
