EURUSD sell-off targets 1.0000

The EURUSD pair is now flying around 1.1230, attempting to recover from an October drop. However, the current upward movement looks like a corrective one. There are signs that the decline may resume within a month. Persistent inflationary pressure in the United States makes the dollar stronger, while economic and political risks in the eurozone limit the growth potential of the single currency.

In September, the region’s annual Consumer Price Index (CPI) accelerated from 3.2% to 3.8%, and the core reading—which excludes the most volatile components—stood at 2.5%. The European Central Bank (ECB) has previously raised its deposit rate to 2.50%. The next meeting is scheduled for October 29. Stubborn inflation limits the regulator's ability to ease monetary policy. At the same time, surging energy prices increase costs for European enterprises, weigh on household purchasing power, and worsen the region’s GDP outlook. As a result, the ECB finds itself in a predicament. On the one hand, the central bank has to contain inflation; on the other, it must prevent an excessive economic slowdown. Additional pressure on the single currency comes from political uncertainty in France and concerns over the sustainability of public finances in certain eurozone countries.

Across the Atlantic, the US September CPI reached 3.7% year-on-year. At the Federal Reserve (Fed) meeting on October 27–28, the regulator will determine its future monetary path. According to the latest Reuters poll, most economists expect interest rates to remain in the 3.75%–4.00% range, though the possibility of a hike in December is still being considered. Thus, a pause at the upcoming meeting would not necessarily signal a transition to policy easing. If the Fed confirms its intention to keep borrowing costs elevated to curb inflation, the appeal of dollar-denominated assets could rise, putting additional pressure on the pair. This is especially true if eurozone economic indicators deteriorate further.

The final recommendation:

— Sell EURUSD at the current price of 1.1230, targeting 1.1000 within two weeks.

— Place a Stop Loss order at 1.1400 to manage risks if the market plays against us.