On October 1, the EURUSD pair opened at 1.17430 and climbed up during morning trading. The dollar has been under sustained pressure in recent days, primarily driven by the significant risk of a US government shutdown.
Market focus remains fixed on the unfolding American budget crisis. A brief shutdown lasting a few days would have a limited effect on the greenback, with some recovery into play after an initial panic subsides. In contrast, a crisis extending beyond a week would intensify fears about slowing US economic growth and boost expectations for a sooner and larger Federal Reserve (Fed) rate cut. This scenario could perpetuate negative dollar sentiment. The fact that key data, particularly the employment report, likely to be delayed is making things even more uncertain, thus hurting the greenback.
In the eurozone, September's inflation report came in stronger than forecast, with figures of 2.4% in Germany and 2.2% for the entire region. This provided support for the euro by diminishing investor expectations of immediate monetary easing from the European Central Bank (ECB). However, there are other signs from the bloc that weaken this view. For instance, there was a surprise drop in German retail sales and rising unemployment, both of which underscore persistent risks of deflation and a slowing GDP. Therefore, the euro's potential to appreciate further based on Consumer Price Index reports alone seems constrained.
From a technical perspective, the market is advancing again after declining to 1.16446. This upward momentum is evident in the Chaikin Oscillator that displays an uptrend and signals active accumulation by buyers. The Stochastic Indicator also points to a bullish move, as its lines crossed over from below on September 30, suggesting a shift into positive territory.
Here's a trading plan to consider:
Since the pair's gain may be temporary, it is better to sell near 1.17700. Take profit: 1.16640. Stop loss: 1.18350.
This forecast is valid from October 1 to October 8, 2025.
This content is for informational purposes only and is not intended to be investing advice.
