The Euro (EUR) might drop below 1.1540, the low from last week, but a long-term decline below this level is improbable. Analysts from UOB Group, Quek Ser Leang and Peter Chia, note that the chance of the Euro hitting 1.1490 during this weak period is decreasing. In the short run, instead of bouncing back to 1.1655 as previously thought, the Euro has declined to a low of 1.1556. While downward pressure is increasing, it isn’t strong enough to hold below 1.1540, and the key support at 1.1490 seems unattainable. Resistance is found at 1.1580, and if it breaches 1.1600, it signals reduced downward pressure.

Euro Long-Term Outlook

Looking at the next 1-3 weeks, the negative outlook continues. There’s a suggestion for a possible decline to 1.1490, but the chances of reaching that level are dropping. If the Euro breaks the 1.1645 threshold, previously estimated at 1.1655, it would indicate that its weakness has stabilized since last week. This info comes from analysts chosen by the FXStreet Insights Team. Last week, we expected EUR/USD to dip below 1.1540 but noted that downward momentum was fading. The likelihood of hitting major support at 1.1490 was seen as lessening, leading to a cautious bearish view for the currency pair. However, new data this morning has changed this outlook notably. The flash Eurozone CPI for September was higher than anticipated at 3.1%, exceeding the expected 2.8%. This unexpected inflation puts pressure on the European Central Bank to adjust its current stance, which could strengthen the Euro. Meanwhile, recent US data indicates a slight economic slowdown. Initial jobless claims rose to 220,000 last week, and August 2025 retail sales figures showed a modest decline. This contrast in economic data favors the Euro over the Dollar for the time being.

Implications For Derivative Traders

For derivative traders, the risk has shifted upward, with the strong resistance level at 1.1645 now becoming a key target. Buying near-term call options with a strike price near 1.1650 might be a smart move to take advantage of a potential breakout. The initial expectation of a drop below 1.1540 now seems unlikely in the coming weeks. We recall drastic movements in EUR/USD during the 2023 policy changes, when the pair shifted hundreds of pips in a few weeks due to changing inflation signals. Implied volatility has risen to 8.5%, up from last month’s low of 7.2%, indicating that the market is anticipating larger price movements. Thus, traders might consider strategies like bull call spreads to manage risk if market sentiment shifts again. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now