FX.co ★ EUR/USD – October 29: What Impact Will the ECB's Decision Have?

On Monday, EUR/USD reversed in favor of the US dollar, and the pair continued to decline on Tuesday and Wednesday toward the 1.1081–1.1086 support level. A rebound from this zone would favor the euro and allow for a modest recovery. However, it is currently extremely difficult to identify what could rescue the euro from its continued decline. A close below the 1.1081–1.1086 level would increase the likelihood of a further decline toward the 200.0% Fibonacci level at 1.0939.

The wave structure on the hourly chart remains bearish. The latest completed upward wave failed to break below the previous low, while the new downward wave has not yet broken below the previous low either. Following the September FOMC meeting, traders expect at least one more monetary policy tightening move before the end of the year and another next year. This factor continues to provide substantial support for the US dollar, while other factors have so far played a secondary role. Bears remain firmly in control, which is also helping the dollar maintain its strength.

Wednesday's news flow centered entirely on the Fed meeting, but even this event could have triggered another wave of selling pressure. As expected, the US central bank left its monetary policy settings unchanged, although two FOMC members voted in favor of tighter policy. Nevertheless, the day's trading did not result in a clear decline in the dollar or a significant change in the EUR/USD exchange rate. In a few hours, the ECB will announce its policy decision, followed half an hour later by a press conference with Christine Lagarde. Will these events affect the euro and encourage bullish traders to take action rather than remain on the sidelines? In my view, they will not. Like the Fed, the ECB is not expected to tighten monetary policy in October, but it must also maintain a hawkish stance because inflation is rising. As with the Fed, the market expects interest rates to rise in December. Therefore, no significant shift in trader sentiment is expected following the ECB meeting.

On the four-hour chart, the pair reversed in favor of the US dollar after the CCI indicator formed a bearish divergence. A new downward move has begun toward the 161.8% Fibonacci retracement level at 1.1088. No new developing divergences are visible on any of the indicators today. A rebound from the 161.8% Fibonacci level at 1.1088 would allow traders to anticipate a modest recovery toward the 127.2% retracement level at 1.1221.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders opened 3,492 Long positions and 443 Short positions. The total number of Long positions held by speculators currently stands at 226,000, while Short positions amount to 361,000. Bears remain in control, and the euro continues to be sold more frequently than it is bought. This trend can be attributed to the complex geopolitical situation in the Middle East and Kevin Warsh's determination to bring inflation down. The market continues to believe that inflation will be reduced to 2% by any available means.

Overall, major market participants continue to show considerable interest in the euro over the longer term. Global events of various kinds, which have been abundant in recent years, inevitably influence investor sentiment and put pressure on risk-sensitive currencies. Moreover, 2026 could set a record for the number of events that could not have been anticipated in advance. Traders therefore have little choice but to adapt to changing conditions as they unfold.

Economic Calendar for the United States and the European Union:

• United States – Third-quarter GDP growth (12:30 UTC).
• United States – Core PCE Price Index (12:30 UTC).
• United States – Personal Income and Spending (12:30 UTC).
• United States – Change in Initial Jobless Claims (12:30 UTC).
• European Union – ECB interest rate decision (13:15 UTC).
• European Union – Press conference with Christine Lagarde (13:45 UTC).

The economic calendar for October 29 contains six releases, with the ECB meeting and the US GDP report being the most significant. Economic data and policy announcements could have a substantial impact on market sentiment on Thursday.

EUR/USD Forecast and Trading Recommendations:

Buying opportunities may arise today if the pair rebounds from the 1.1081–1.1086 level on the hourly chart, with a target of 1.1220. Selling opportunities arose when the pair closed below 1.1220, with the 1.1081–1.1086 support level as the target. These short positions can remain open today.

The Fibonacci retracement levels are drawn from 1.1325 to 1.1712 on both the hourly and four-hour charts.