EUR/USD: Dollar bolstered by safe haven status, energy riches and economic momentum
EUR/USD must be one of the most well-behaved FX pairs in the world right now, sitting comfortably in a long-running downtrend, refusing to stray too far from the current trajectory no matter what the world is throwing at it.
EUR/USD downtrend remains strong
The daily chart speaks for itself, setting lower high after lower high with corrective rallies in between, largely reflecting the deterioration in the macroeconomic outlook relative to the United States in recent months. Lacking domestic energy supply, and with one war ongoing to the east and another about to erupt a little further south, it’s hard to get excited about euro right now. In contrast, the US dollar is not only outperforming on the economic front, but also energy rich and a notable safe haven. Check. Mate.
Having failed to sustain a topside break following the US consumer price inflation report last week, EUR/USD was hammered back into the downtrend on the escalation of the conflict between Israel and Hamas, reinforcing the view it remains a sell-on-rallies play.
Right now, those contemplating initiating short EUR/USD positions may want to place protective stops above downtrend resistance, currently located around 1.0580. It has found buyers on dips between 1.0480 over the past fortnight, making that the first logical target for potential shorts. 1.0450, the low hit in early October, and 1.0360 are the next downside levels to watch.
Alternatively, a clean break of the downtrend may open the door for a possible bounce back towards 1.0635, the highs struck after the US inflation report.
EUR/USD to remain headline-driven near-term
Like other risk assets, headlines relating to the Israel-Hamas conflict will continue to drive the price action in EUR/USD near-term with other information coming in a distant second in terms of relevance, including the latest German ZEW survey and US retail sales which will top the data calendar on Tuesday.
-- Written by David Scutt
Follow David on Twitter @scutty
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Contracts for Difference (CFDs) are not available to US residents.
FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of StoneX Group Inc.
Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.
© FOREX.COM 2026