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EUR/USD Forecast: Euro Slips to 17-Month Lows, 1.11 Next?

By :   Matt Weller CFA, CMT , Head of Market Research
October 12, 2026 8:45 PM

EUR/USD Key Points

  • EUR/USD is trading at 17-month lows near 1.1160 as political developments in Germany and Spain inject uncertainty into the euro’s outlook.
  • EUR/USD is trending lower within a well-defined bearish channel, and the next support level to watch is the 50% Fibonacci retracement of the January 2025-2026 rally near 1.1135
  • The 14-period RSI is showing a persistent bullish divergence dating back to the start of the month, signaling that the selling momentum is slowing.

The US bond market may be closed to start the week, but the foreign exchange market remains active, and the world’s most widely-traded currency pair is falling to 17-month lows.

From a fundamental perspective, there are a couple of political factors weighing on the euro. First, Spain, the fourth-largest economy in the Eurozone, has moved forward its general election by eight months to November 29th after a parliamentary defeat for emergency housing measures and public protests over the cost and availability of housing. The vote will test whether Prime Minister Pedro Sánchez can hold together the coalition of parties that has kept him in power, or whether the conservative Popular Party and the far-right Vox can convert their combined support into a governing majority. More to the point for traders, it’s another element of uncertainty that is weighing on the outlook for the single currency.

Separately, Germany elected Tobias Rausch of the Alternative for Germany (AfD) party as president of the Saxony-Anhalt state parliament. This is the first time since World War II that a far-right politician has held this post in a German regional parliament and ratchets up the political uncertainty on the continent another notch.

Add that to the still-fragile political and fiscal situation in France, and there is no shortage of fundamental causes for concern for euro bulls.

Euro Technical Analysis – EUR/USD 4-Hour Chart

Source: TradingView, StoneX

As the chart above shows, EUR/USD is trending lower within a well-defined bearish channel, having seemingly seen a downside resolution to last week’s consolidation near 1.1200. Technically speaking, the next support level to watch is the 50% Fibonacci retracement of the January 2025-2026 rally near 1.1135.

However, there is some evidence that the downtrend may be getting long in the tooth; specifically, the 14-period RSI is showing a persistent bullish divergence dating back to the start of the month, signaling that the selling momentum is slowing. EUR/USD bulls will accordingly be looking for a bounce if the US CPI report on Wednesday comes in cooler-than-expected.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

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