NextFin news, The EUR/USD currency pair is trading near 1.1566 as of late New York session on November 10, 2025, recovering from a recent low of 1.1467 reached last week, which was its weakest level since early August. This modest rebound followed a brief two-day rally lifting the pair above the 1.1550 mark. However, the market tone remains defensive amid lingering uncertainty caused by a prolonged US government shutdown exceeding six weeks, persistent Federal Reserve policy ambiguity, and renewed signs of economic stagnation across the Eurozone.
The US government shutdown has halted the release of critical monthly economic indicators including Non-Farm Payrolls and Consumer Price Index data for two consecutive months. This data blackout has left financial markets with no official confirmation of US growth or inflation trends, severely complicating the Federal Reserve’s ability to provide clear forward guidance. As a result, trader expectations have sharply shifted; money-market pricing now reflects only a 30 percent chance of a Fed rate cut in December, down from nearly 70 percent prior to the shutdown. Concurrently, major corporate layoffs by Amazon (NASDAQ: AMZN), UPS (NYSE: UPS), and regional banks have further eroded confidence in the labor market, with private alternative data indicating hiring momentum at its weakest since 2020. This deterioration has weakened the US Dollar Index (DXY) by about 1.1 percent over the past week, although the euro has struggled to take advantage due to its own growth challenges.
On the European front, the economic landscape remains subdued. ECB President Christine Lagarde recently tempered her outlook after initial indications in September that the disinflationary phase had concluded. Economic data for October revealed contractions in key Eurozone economies: Germany’s industrial production declined by 0.4 percent month-on-month and France’s consumer spending dropped by 0.2 percent. The composite Eurozone Purchasing Managers Index (PMI) stands at a recessionary 47.9, reinforcing concerns about economic stagnation. The ECB’s current deposit rate remains at 3.75 percent with skepticism mounting on whether this can be maintained past Q1 2026 without triggering deflationary risks. The sharp divergence between cautious ECB optimism and worsening hard data exerts downward pressure on the euro, compounded by an unusually wide yield spread where German 10-year Bunds yield 1.92 percent versus US 10-year Treasuries at 4.55 percent—a carry spread at a three-year high of 263 basis points, anchoring EUR/USD below 1.1600.
Technically, the 1.1500 level continues to serve as a psychological support and pivot, with the recent dip to 1.1467 prompting institutional buying viewed as short-term oversold positioning rather than a substantial trend reversal. The pair remains locked in a sequence of lower highs and lower lows since the Fed’s rate cut decision on September 17. Recovery attempts are capped by the 50-day moving average near 1.1628, while the longer-term base around the 200-day average at 1.1370 provides key support. The RSI at 42 signals weak momentum despite a mild bounce. To shift the technical outlook towards bullish, a decisive daily close above 1.1620 is necessary, potentially targeting the 1.1680–1.1730 zone. Failure to break above resistance may renew selling pressure toward 1.1450 and further to 1.1380.
Liquidity conditions exacerbate the fragile market environment. Institutional trading desks describe the EUR/USD market as directionless with thinning liquidity, evidenced by a 27 percent month-on-month decline in options volumes and a drop to 178,000 contracts in EUR/USD futures open interest on the CME—the lowest since 2022. Large banks hold flatter books, reducing overnight exposure amid ongoing political uncertainty. Algorithmic trading dominates price movements, generating volatile intraday whipsaws of 20 to 40 pips around critical support and resistance levels. Additionally, European exporters have opportunistically re-hedged dollar receivables above 1.1550, adding supply pressure limiting euro appreciation. U.S. hedge funds maintain a net-long USD futures position of $12.4 billion, positioning for renewed dollar strength once the US economic data blackout resolves.
Geopolitical tensions further complicate the outlook for EUR/USD. The escalating trade confrontation between the US and China, accompanied by renewed tariff threats from President Donald Trump’s administration, risks dampening European export demand given the eurozone’s significant exposure—approximately €230 billion annually to Chinese markets. Lower Brent crude oil prices near $63.10, down from $71 last month, relieve some inflation concerns but squeeze margins for European commodity-linked sectors, contributing to a 1.3 percent month-on-month decline in the Euro Stoxx 50 index. Safe-haven flows into the Swiss franc and Japanese yen indicate risk aversion, with the EUR/CHF cross weakening to 0.9550, a near six-month low, underlining capital preservation preferences in Europe.
The standoff in policy direction between the US and Europe highlights a critical near-term dilemma. The Federal Reserve’s inability to provide a clear 2026 monetary policy roadmap due to fiscal gridlock sharply contrasts with the ECB’s cautious stance amid fragmented eurozone economies and deflation concerns. Both central banks face political and fiscal constraints—Congress’ shutdown impeding US economic data flow and eurozone political fragmentation limiting ECB decisiveness—resulting in a market pricing more for relative economic stagnation than differential growth rates. Despite dollar softness in parts of the currency complex, the structural real yield advantage—measured as a 1.8 percent premium on US core PCE inflation relative to Eurozone core HICP inflation—continues to favor the US dollar and bias the EUR/USD pair downward.
Looking ahead, the EUR/USD is likely to remain confined within a narrow range between 1.1445 and 1.1680 until key fundamental uncertainties resolve. The market awaits an end to the US government shutdown and the resumption of critical economic data releases, which will provide the Fed with the data necessary to clarify its December meeting intentions. On the European side, only a robust signal of stabilizing or accelerating growth could shift investor sentiment and underpin a sustainable euro rebound. Technical indicators suggest that until these catalysts emerge, trading strategies favor selling rallies with tight risk controls around resistance levels at 1.1620 and 1.1680 while defending support near 1.1500–1.1450. Should stagnation persist or worsen, downside risks towards 1.1380 could materialize, reflecting the macro paralysis gripping both economic giants.
According to TradingNEWS, the current market environment is characterized by defensive positioning, subdued liquidity, and heightened geopolitical risks, keeping EUR/USD's fragile recovery tentative and vulnerable. Investors should closely monitor the US political developments and ECB policy signals post-November 15 Fed communications, which may trigger an eventual directional breakout and greater volatility after a prolonged period of market compression.
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