Monday began with the euro softer against the dollar, near 1.1230. Budget and political strains in Europe are weighing on sentiment, and the chart still leans negative.
Market experts at Librrova examine what is driving the pair and which levels matter most.
Europe’s Political Mood Weighs On The Euro
France’s budget outlook and wider political tension across the continent are encouraging some selling of the euro. An ECB board member is also due to speak later in the day, which adds a source of headline risk.
Protests have spread across several countries, with France seeing the largest turnout and Belgium, Italy and Portugal also affected. Young people have taken to the streets over schools and the cost of living. If the unrest widens, it could add pressure on the euro in the near term.
The Dollar Side Offers Some Cushion
Softer expectations for a Fed hike may limit the downside for the pair. A month ago, markets gave roughly even odds to an unchanged Fed rate this month. Today the figure is close to 84%, according to CME FedWatch.
At a recent appearance, the head of the Fed struck an upbeat tone on US growth but offered no guidance on interest rates. By declining to commit before the October and December meetings, policymakers keep the dollar tied to each new data release, and that uncertainty can push the pair either way.
A Bank Sees A Brighter Picture
One large bank takes a friendlier view of the euro than the daily chart suggests. Its strategists say bond market gaps between Europe and the US are not the main driver of the currency at the moment, and that other forces matter more.
In their view, tension in French government bonds reduces the odds of an ECB hike at the end of the month, but not of a December move, which markets already treat as nearly certain. They put a fair price for the pair at 1.1285, only slightly above where it trades now.
The same bank notes that the euro recently found a floor around 1.11, the midpoint of its larger climb from the 1.01 area, and has since pushed past the 1.1240 to 1.1250 barrier. If those gains survive into today’s close, the week could finish with a bullish reversal, and 1.1245 is the nearest line to defend during the day.
The Daily Chart Stays Negative
Price has been sliding through the lower half of its Bollinger channel, and two lines sit above it: the 100-day average and the channel midline. With the RSI near 40, momentum is weak without being oversold, so sellers keep an edge.
The bank’s view and the daily chart do not fully agree, which shows a market that has not decided. A strong weekly close would favor buyers, and a weak one would support the bearish reading.
Support Levels Below
The first floor is the low of October 15, at 1.1151. Next comes the lower Bollinger band, close to 1.1105, and a slide through it would bring the May 2025 low at 1.1050 into view.
These markers are packed closely together, so a decline could accelerate once the first one fails. Many traders prefer to wait for a daily close beneath support before treating the move as real.
Resistance Levels Above
The nearest obstacle is the Bollinger middle band at 1.1270. After that, the July 28 low at 1.1353 is the next barrier, and higher still the upper band near 1.1440 and the 100-day average at 1.1465 form a thick supply area.
With so many hurdles stacked above, any recovery would probably come in steps. A firm close above 1.1270 would be the first sign that sellers are losing their grip.
Traders should also watch how price reacts around the weekly close, since the bank’s reversal scenario depends on it. A strong finish could attract new buyers toward the 1.1270 area, while a weak one would keep sellers focused on 1.1151 and the lower levels.
Conclusion
EUR/USD trades near 1.1230 below its 100-day average, caught between European political risks and a dollar supported by uncertainty about Fed policy. The 1.1151 support is the first level to defend, while 1.1270 is the first hurdle for buyers.
Traders following EUR/USD strategies should watch European political news, ECB comments and the weekly close, since these factors are likely to decide whether the euro stabilizes or slides toward 1.1105.