The EUR/USD currency pair has experienced a significant decline, dropping over 5% from its August highs. This downward trend has persisted for five consecutive weeks, but the pair recently snapped this losing streak with a rebound. The decline has now reached a critical technical support zone, raising the possibility of a larger price inflection.
The support zone in focus is around 1.1110/63, a region defined by key technical levels including the 38.2% retracement of the 2022 advance, the 2024 high-week close, and the 2025 May low-week close. Weekly momentum indicators have deteriorated, but the broader bearish outlook remains intact. Bulls face significant resistance overhead, with key levels at 1.1276 and 1.1355/65. A stronger recovery is needed to suggest a more meaningful low is in place.
Looking ahead, Eurozone and U.S. PMI data are set to headline next week's event risk, ahead of the Fed and ECB rate decisions later this month. The PMI release could directly shape expectations ahead of the ECB’s October 29 meeting, while U.S. housing data and PMIs are also due. Any divergence between European and U.S. activity could produce a sharp move in EUR/USD.
From a trading standpoint, rallies would need to be limited to 1.1355/65 if the price is heading lower. A close below 1.1110 would fuel the next leg of the decline. The immediate focus is on whether the Euro can build on this initial rebound or if renewed selling pressure triggers another leg lower.