Euro Holds Firm as Yield Slide Offsets Bearish Setup

Key Moments

EUR/USD traded higher for a second consecutive session, reaching the 1.1225-1.1230 area amid broad U.S. Dollar softness.
Falling U.S. bond yields and reduced expectations of imminent U.S. military action on Iran encouraged USD profit-taking, but geopolitical and Federal Reserve risks limited further downside.
Technical signals still point to a broader bearish structure, with resistance seen near 1.1280-1.1300 and key support around 1.1160.

EUR/USD Supported by Softer Dollar, But Gains Remain Capped

The EUR/USD pair attracted additional buying for a second straight session, lifting spot prices into the 1.1225-1.1230 zone during Friday’s Asian trading hours. The move came against the backdrop of a weaker U.S. Dollar, although the pair continued to trade within the range that has constrained price action since the start of the month, keeping bullish conviction in check.

President Donald Trump said on Thursday that the United States would not resume military strikes on Iran before the November 3 midterm elections. That comment, combined with an overnight decline in U.S. bond yields, prompted market participants to lock in profits on U.S. Dollar positions. Even so, the risk premium tied to the ongoing U.S.-Iran tensions over Tehran’s nuclear program remained a factor, while the U.S. Federal Reserve’s hawkish stance was seen as a key element preventing a more pronounced Dollar selloff and, in turn, capping EUR/USD upside.

Euro Faces Headwinds from French Debt Concerns and Fed Stance

On the Euro side, worries about rising debt levels in France and political gridlock ahead of next year’s election were cited as potential constraints on more aggressive long positioning in the common currency. These fundamental headwinds, layered on top of a still-bearish technical backdrop, suggest that buyers would need to generate strong follow-through demand to confirm that EUR/USD has carved out a near-term floor and can extend this week’s modest rebound from the 1.1160 area, which marked the lowest level since May 2025.

Technical Picture: Bearish Consolidation Dominates

From a technical perspective, the decline from the August monthly swing high, followed by recent sideways trade, can still be characterized as a consolidation within a broader downtrend. The Relative Strength Index (RSI) hovering near 50.4 reflects neutral momentum after a recovery from oversold territory, while the Moving Average Convergence Divergence (MACD) indicator has shifted modestly into positive territory. Together, these signals point more to a potential pause in the prevailing move than a clear bullish reversal in the face of nearby resistance.

Level	Type	Comment
1.1355-1.1360	Resistance	Next relevant barrier if a short-covering rally extends
1.1300	Resistance	Psychological and chart resistance; break could trigger further upside
1.1280	Resistance	Upper boundary of the prevailing trading range
1.1230 area	Spot region	Current trading area after two sessions of gains
1.1200	Support	Break lower would expose range support
1.1160	Key support	Range floor and recent low; failure here would reinforce bearish control

Any additional upside is expected to encounter firm resistance near 1.1280, aligning with the upper edge of the established range. Above that, the 1.1300 handle represents the next important threshold. A decisive move through 1.1300 could spark a short-covering rally, targeting the next significant obstacle in the 1.1355-1.1360 band. Even if such a move unfolds, it may still be treated by many participants as an opportunity to re-enter short positions, given the underlying positive sentiment toward the U.S. Dollar highlighted by the Fed’s stance and lingering geopolitical uncertainty.

Downside Risks Remain Dominant

The broader technical structure continues to favor the downside. On weakness, a break below 1.1200 would shift focus back toward support at 1.1160, the base of the current range. A sustained failure to hold that region would likely be interpreted as a fresh bearish signal, opening the door to more pronounced declines in EUR/USD.