Overview of the EUR/USD Pair. October 9. Oh, That Fed Minutes...

The EUR/USD currency pair continued to tilt sharply south on Thursday—which, frankly, no longer surprises anyone. Need we say that on Wednesday or Thursday there were no real grounds for another rise in the US currency? Late Wednesday, three weeks after the Federal Reserve meeting, the FOMC minutes were published. We repeatedly say this is not only a formal event but also outdated. Yet many analysts worldwide keep stressing it, and the next day proclaim that the minutes had no market impact...

The Fed minutes are a document containing various details of the FOMC meeting. They aren't meant to provide information beyond what was announced immediately after the meeting. They do not add new conclusions; they merely disclose the discussion. For example, the market already knew without the minutes that the voting members supported tightening. The market already knew hawkish sentiment inside the FOMC had strengthened—the dot plot signaled that. In other words, the market had the most important information three weeks ago.

During those three weeks, the US released the PCE index — the inflation measure many bankers and analysts call the Fed's favorite — as well as Nonfarm Payrolls and the unemployment rate for September. So clearly, information three weeks old is no longer relevant: economic conditions have changed. Inflation did not accelerate, and the labor market weakened again. Thus the Fed's hawkish tilt could have softened by now, at least for near-term meetings. Moreover, over the past two weeks, Fed officials have spoken almost every day, giving the market full answers to its questions. For forecasting the Fed's next moves, current speeches by officials are far more valuable than minutes published three weeks after the meeting.

Most interestingly, the dollar rose all day Wednesday as if it were front-running the minutes. That could be the case—over the past month, any excuse has worked to lift the dollar. The market has replayed the same Fed-tightening narrative many times; for a month straight, participants have bought dollars without pause. Does the market need new solid reasons to keep that endless buying going? Yet the fact remains: the dollar rose BEFORE the minutes were published, and the market could not have known those details in advance. Therefore, we are inclined to conclude that neither the minutes, nor macro reports, nor fundamentals, nor geopolitics are the true causes of the dollar's strength. It is simply impossible that traders receive news that supports only the dollar every day. Especially since everyone knows that is not true. We continue to observe an inertial, speculative move.

The average volatility of the EUR/USD currency pair over the last 5 trading days as of October 9 is 79 pips and is characterized as "average." We expect the pair to move between 1.1120 and 1.1278 on Friday. The longer-term linear-regression channel has turned sideways, indicating another trend change. The CCI indicator entered the oversold area three times and formed three "bullish" divergences, warning that the illogical downtrend may be ending. However, the market is not responding to technical signals.

S1 – 1.1169

S2 – 1.1108

R1 – 1.1230

R2 – 1.1292

R3 – 1.1353

The EUR/USD pair continues to move lower, but we still view the decline as a correction ahead of a new uptrend. The global fundamental backdrop for the dollar remains negative, but in 2026, geopolitical events and then the Fed's hawkish tilt have provided strong support for the US currency. When price is below the moving average, consider short positions targeting 1.1120 and 1.1108. Above the moving average line, long positions are relevant, with targets of 1.1353 and 1.1414.