EUR/USD Continues Downward Trend as Fed Expectations Shift

The EUR/USD pair continues to decline, trading around $1.1286 on October 1, after falling below a key support zone that had contained it for several months.

This move has left all major moving averages behind the current price, and yesterday's break of the lower boundary of the range has received follow-through.

The eurozone data released yesterday failed to provide strong support for the euro, with unemployment remaining at 6.4% in August and inflation standing at 3.2% y/y.

In contrast, U.S. macroeconomic data was more favorable, with a revised Q2 GDP of 2.2% annualized and consumer spending rising by 0.9% in August.

This has led to a shift in expectations for the Fed, with the probability of another rate hike falling to around 35-40%, and a pause becoming more likely.