EUR/USD appreciates amid risks of an imminent US government shutdown
- The Euro appreciates to the 1.1725 area on concerns about a possible government shutdown in the US.
- US President Trump will meet congressional leaders 24 hours before the deadline in an attempt to avert the shutdown.
- Technically, the pair maintains the bearish structure from 1.1920 highs intact.
EUR/USD maintains a moderately bid tone on Monday, consolidating around 1.1725 during the European session, after bouncing from 1.1645 lows last week. Eurozone sentiment data has failed to cheer investors, but market concerns about a highly likely US government shutdown, and hopes of back-to-back Federal Reserve (Fed) interest rate cuts are keeping the US Dollar depressed.
In Europe, the European Commission’s Consumer Sentiment Index has confirmed the slight improvement anticipated by preliminary figures, but remains at levels well below the historical average, suggesting that the economic uncertainty is weighing on Eurozone consumers’ mood. Beyond that, Industrial Confidence deteriorated less than expected, while the Services Sentiment dropped further.
The main focus on Monday is on US President Donald Trump, who will hold a meeting with Republican and Democratic representatives in the last attempt to avoid the closure of the government on Wednesday, which is the first day of the 2026 fiscal year. Chances of a last-minute agreement, however, seem remote, as the positions of both parties are far apart, and the market fears that the shutdown might delay the release of the key Nonfarm Payrolls report due on Friday, which could complicate the Fed’s rate-setting activity if the data is not released before the central bank’s meeting on October 28.
Later in the day, a slew of European Central Bank (ECB) speakers will provide some fundamental context for the Euro, while in the American session, a slew of Fed officials are likely to offer further clues about the bank’s near-term monetary policy.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.19% | -0.34% | -0.46% | -0.08% | -0.31% | -0.04% | -0.18% | |
| EUR | 0.19% | -0.15% | -0.44% | 0.10% | -0.12% | 0.14% | -0.00% | |
| GBP | 0.34% | 0.15% | -0.16% | 0.25% | -0.03% | 0.30% | 0.15% | |
| JPY | 0.46% | 0.44% | 0.16% | 0.42% | 0.19% | 0.30% | 0.33% | |
| CAD | 0.08% | -0.10% | -0.25% | -0.42% | -0.20% | 0.04% | -0.10% | |
| AUD | 0.31% | 0.12% | 0.03% | -0.19% | 0.20% | 0.27% | 0.12% | |
| NZD | 0.04% | -0.14% | -0.30% | -0.30% | -0.04% | -0.27% | 0.00% | |
| CHF | 0.18% | 0.00% | -0.15% | -0.33% | 0.10% | -0.12% | -0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: Government shutdown fears keep the US Dollar on its back foot
- The possibility of a US government shutdown is likely to be front and center on Monday, keeping the US Dollar under pressure. In the absence of more relevant macroeconomic data, all eyes are on Trump’s meeting with bipartisan congressional leaders, only 24 hours before the deadline to avoid the closure of the federal government.
- US Treasury yields are pulling back from recent highs. The yield of the benchmark 10-year note has retracted 5 basis points from last week’s highs at 4.2%, and the 2-year note is showing a similar behaviour, pulling back from 3.67% highs on Friday to 3.63% on Monday’s early European trading.
- Comments from Cleveland Fed President, Beth Hammack, defending that the Fed’s monetary policy needs to remain restrictive, due to the upside risks to inflation, have failed to provide any significant support for the US Dollar earlier on Monday.
- In the Eurozone, the final Consumer Confidence reading confirmed a mild improvement to -14.9 in September, from -15.5 in August. Industrial Confidence edged down to -10.3, from -10.2 in August, although less than the -10.9 expected. Services Sentiment, on the other hand, fell to 3.6 in September, from 3.8 in August, beyond the consensus 3.7 reading.
- Somewhat later, ECB committee members Joachim Nagel, Isabel Schnabel, and Philip Lane are due to speak, and will likely say that the bank is well-positioned to cope with an uncertain scenario and will act in accordance with incoming data.
- In the US, the focus will be on the speeches of Fed Governor Christopher Waller, Cleveland Fed President Beth Hammack, St. Louis Fed President Alberto Musalem, New York Fed President John Williams, and Atlanta Fed President Raphael Bostic, scheduled throughout the American session.
- On Friday, the US Personal Consumption Expenditures Price Index confirmed market expectations of steady inflationary pressures and kept hopes of back-to-back Fed rate cuts alive. Data from the US Bureau of Economic Analysis showed that yearly inflation ticked up to 2.7% in August from 2.6% in July, while the core inflation rose at a steady 2.9% yearly pace, in line with expectations.
Technical Analysis: EUR/USD resistance at 1.1730 keeps holdiingh g bulls
EUR/USD is moving up on Monday, yet with technical indicators on the 4-hour chart mixed. The Moving Average Convergence Divergence (MACD) shows a bullish crossover, but the Relative Strength Index (RSI) is struggling to return above the key 50 level, which suggests that the upward trend is frail. The pair broke below an ascending trendline last week, highlighting a potential trend shift and might be on a corrective recovery, ahead of further depreciation.
The September 19 and 20 lows, around 1.1730, are now acting as resistance, ahead of the reverse trendline, now at 1.1765. The pair should return above those levels to break the immediate bearish structure and shift the focus back to the September 23 and 24 highs, at 1.1820.
To the downside, support is located in the 1.1645-1-1455 area, which held the pair last week and also on September 11. Further down, the September 2 and 3 lows, near 1.1610, and the August 27 low, at 1.1575, would be the next targets.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.