Euro Under Pressure as Safe-Haven USD and Lagarde Loom (

Key Moments

Euro Struggles as Risk Sentiment Deteriorates

The EUR/USD pair is unable to extend Friday’s limited recovery from the mid-1.1400s – its lowest point since late July – and is edging lower at the start of the new week. The pair is trading around the 1.1475 area, with sentiment toward the common currency constrained by mounting geopolitical risks.

European officials have warned of an increased risk of Russian drone, missile, sabotage, and cyber operations directed at NATO members supporting Ukraine in the coming months. French President Emmanuel Macron on Friday stated that the Russian hybrid threat facing Europe and France had intensified. These warnings are weighing on the Euro, while simultaneous escalation in the Middle East is underpinning the US Dollar (USD).

Geopolitical Backdrop Supports the Dollar

In recent developments, Iran-backed Houthi forces in Yemen said they targeted sensitive locations in the Saudi capital Riyadh on Saturday using missiles and drones. In addition, Iran outlined seven conditions for resuming negotiations with the United States.

This backdrop is sustaining a geopolitical risk premium across markets. Combined with the US Federal Reserve’s (Fed) hawkish stance, it is supporting demand for the safe-haven Greenback and exerting downward pressure on EUR/USD.

Central Bank Divergence in Focus

At the end of its September meeting last Wednesday, the Fed raised interest rates for the first time in more than three years. The accompanying dot plot showed that Fed officials anticipate one additional rate increase this year.

By contrast, while the European Central Bank (ECB) has highlighted that price pressures could persist for longer than previously expected, this has increased expectations for another policy tightening step in October, which offers some offsetting support to the Euro and the EUR/USD pair.

ECB President Christine Lagarde is scheduled to speak later this Monday, and her remarks may provide fresh direction for the single currency. However, market participants are likely to remain highly sensitive to new geopolitical headlines, as well as to the outcome of a closely watched meeting between US President Donald Trump and Chinese President Xi Jinping on Thursday, which could shape broader risk sentiment and, in turn, the near-term path of the US Dollar and EUR/USD.

EUR/USD Technical Picture

On the technical front, EUR/USD continues to trade with a bearish short-term bias, remaining below the 100-day Simple Moving Average (SMA) at 1.1546 and the 61.8% Fibonacci retracement level at 1.1486. The closest support is located at the 78.6% Fibonacci retracement at 1.1426, ahead of a more notable support zone near 1.1350.

On the upside, buyers would first need to push the pair back above the 61.8% retracement at 1.1486 to reduce immediate downward pressure. Subsequent resistance comes in at the 50.0% retracement near 1.1529 and then the 100-day SMA at 1.1546. A sustained move beyond these levels would be required to argue for a more meaningful recovery toward 1.1571 and 1.1623.