FX.co ★ PipsHunter99 | EUR/USD

Technical and Fundamental Analysis of the EUR/USD pair The EUR/USD pair recovered toward 1.1220 during early Asian trading on Monday, attempting to stabilize after recent selling pressure. However, the euro's recovery remains vulnerable as escalating unrest in France, concerns about the country's fiscal position, and uncertainty ahead of this week's central bank meetings weigh on sentiment. Traders are also watching Germany's IFO business climate report for fresh signals about the health of the eurozone's largest economy. French political and social tensions remain a significant concern for the single currency. According to reports, demonstrations driven by the rising cost of living and widening inequality turned violent for a second consecutive weekend. France's Interior Ministry estimated that approximately 410,000 people participated in protests across several major cities, including Paris. The unrest has added to investor concerns about the government's ability to address the country's budget deficit and public debt, increasing the risk of further pressure on French financial assets and the euro. Investors are also preparing for the European Central Bank's October policy meeting on Thursday. Markets broadly expect the ECB to maintain its benchmark interest rate at 2.5%, while the possibility of additional tightening before the end of the year remains an important factor in euro pricing. ECB President Christine Lagarde's previous comments that a moderate policy response to inflation would be appropriate have left traders looking for greater clarity about the pace of future rate adjustments. Strategists at Brown Brothers Harriman have noted that above-target eurozone inflation and a resilient growth outlook could leave room for further ECB rate hikes. Their assessment indicates that market pricing implies nearly 75 basis points of additional tightening over the next 12 months, potentially taking the policy rate to 3.25%. Such expectations could support the euro by narrowing the expected policy divergence between the ECB and the Federal Reserve. The Federal Reserve's decision on Wednesday will be equally important. According to the CME FedWatch figures provided, markets assign approximately a 90.6% probability to the Fed maintaining interest rates at the October meeting, while the probability of a rate increase in December stands at 79.4%. These expectations leave the dollar sensitive to the Fed's forward guidance, particularly any signals suggesting that persistent inflation could delay monetary easing or require tighter policy. Broader market conditions have offered some near-term relief for the euro. Global currency markets opened the week in relatively narrow ranges, while the US dollar weakened slightly as Treasury yields declined and oil prices eased amid reports of diplomatic efforts to reduce regional tensions. The euro advanced toward $1.1220, although the move has not yet established a decisive bullish reversal. Germany's IFO business climate data, scheduled for release later Monday, could provide another catalyst. The previous reading stood at 89.9, with the October forecast near 90.0. A stronger result could reinforce expectations of improving business confidence and support the euro, whereas a weaker reading could renew concerns about the eurozone's growth outlook. EUR/USD is trading near 1.1222, with the four-hour chart showing a mild descending structure following recent downside pressure. The 20-period simple moving average is hovering near the current price and offering short-term dynamic support, while the 50-period SMA sits slightly higher, reinforcing the resistance overhead. The primary H4 supply zone lies between 1.1250 and 1.1280, where previous swing highs and repeated selling pressure have capped advances. A secondary resistance area is located around 1.1300–1.1310. A decisive four-hour close above 1.1280 would weaken the immediate bearish structure and could expose the higher supply region. On the downside, the first significant H4 demand zone sits between 1.1150 and 1.1180, where previous buying interest helped limit declines. A stronger demand area extends toward 1.1100–1.1140. A sustained break below 1.1150 would increase the risk of a deeper correction. The hourly chart shows tighter consolidation, with immediate demand concentrated around 1.1195–1.1210. This zone aligns with recent lows and the short-term recovery structure. The 20-period SMA is tracking close to price around 1.1215–1.1220, while the 50-period SMA remains overhead and limits upward momentum. Immediate resistance is located between 1.1235 and 1.1255, where recent session highs and rejection wicks indicate renewed selling interest. A sustained move above 1.1255 could open the way toward the H4 supply zone near 1.1280. Conversely, a break below 1.1190–1.1200 would expose the stronger H4 demand area around 1.1150. The short-term outlook remains neutral to mildly bearish while EUR/USD trades below the 1.1235–1.1255 resistance area. Potential ECB tightening and a softer dollar provide support, but French political risks and uncertainty surrounding the Fed limit the recovery.