Following a three-day slump, the EURUSD pair is trying to find its footing and form a local bottom. This sets the stage for a potential technical rebound as the market heads into next week's Federal Reserve (Fed) decision.
Oscillators suggest a recovery could be brewing as selling pressure is drying up. Despite a recent bearish crossover, the downward momentum of the Stochastic Indicator is slowing down. With %K (33) nearing oversold territory and %D (54) being neutral, this setup often signals that an upward reversal might be around the corner to work off the oversold condition.
The Chaikin Oscillator adds to this picture of fading bearish pressure. Although it is still in the red, its decline is running down. Consequently, capital outflows are losing intensity, and sellers are running out of steam. Together, these signals paint a picture of a downtrend losing momentum and create a technical case for a rebound, especially if buyers defend the 1.15980 support.
Fundamentally, however, the euro faces headwinds from political instability in France. The government's decision to scrap a major pension reform, followed by a credit rating downgrade from S&P Global, has pushed up the risk premium on French bonds. This casts a shadow over the single currency, as investors worry about the long-term fiscal health of the eurozone's second-largest economy.
Nevertheless, these euro-negative factors could be temporarily overshadowed by a weakening US dollar. Ongoing geopolitical tensions and trade disputes are pressuring the greenback, giving the single currency enough room to recover—even if its upside is capped by traders having priced in a likely Fed rate cut.
Consider the trading plan down below:
Buy EURUSD around 1.15980. Take profit: 1.16630. Stop loss: 1.15410.
This forecast is valid from October 22 to October 29, 2025.
This content is for informational purposes only and is not intended to be investing advice.
