FX.co ★ Flokki | EUR/USD

Fundamental Analysis of the EUR/USD EUR/USD is trading at 1.1055 on Friday, close to its lowest level in about 18 months and heading for another weekly loss. The euro is down roughly 0.8% this week, which would be its largest weekly loss since late September, while the dollar index sits at 103.17, its highest since April 2025. The trigger was US inflation: hotter-than-expected data strengthened expectations of another Fed rate hike next month and raised the prospect of a larger 50 basis point move. As a result, odds of a December hike have risen to around 90%. The euro's own backdrop is weak despite two ECB hikes this year. All 71 economists in a Reuters poll expect a 25 basis point increase to 2.75% in December, but the market doubts the ECB can go much further. Societe Generale's Broux says the ECB will probably stop raising rates after December , so the rate spread will widen further in favor of the dollar. Growth worries add to the pressure, because the ECB's lending survey showed a marked fall in loan demand and weaker investment plans. Politics matters too: France's fiscal troubles and uncertainty about a possible early departure of ECB President Lagarde continue to weigh on sentiment. Short-term traders should remember that euro short positions are already stretched, so rallies may stay corrective rather than mark a durable change in trend. Today's key release is US producer prices, which could extend the dollar's gains if it also surprises higher. 1-Hour Chart Analysis The 1-hour chart shows price at 1.1055 stalling just above the fresh low near 1.1047. Both moving averages are sloping down, and the 5 EMA is beneath the 20 EMA, which sits around 1.1068, a clean bearish alignment that has held through the whole week. Price is stuck beneath the 20 EMA, so every small bounce has been sold quickly. The first resistance is the 20 EMA zone at 1.1068 to 1.1085, followed by 1.1120. An hourly close above 1.1085 with the 5 EMA turning up would suggest a short-covering rally, and a push through 1.1120 could extend to 1.1160. On the downside, support is the day's low at 1.1047, then the round 1.1000 level. A close below 1.1047 would put new multi-month lows in play, with 1.1000 and then 1.0950 next. A reasonable intraday plan is to sell a rejection at the 20 EMA with a stop above 1.1090 and a target of 1.1010. Buyers should avoid catching the low and wait for a close above the 20 EMA. Because US PPI is due today, spreads may widen and false moves can appear, so keep position sizes modest.

4-Hour Chart Analysis The 4-hour chart shows a clear downtrend that has accelerated this week. Price is trading below both averages, with the 20 EMA near 1.1125 and the 5 EMA close to 1.1085, and both are falling. Since the early-November high near 1.1229, the pair has made a series of lower highs and lower lows, a textbook sequence for a trend that sellers control. The recent breakdown also cleared the October low at 1.1161, which now becomes the main overhead resistance. Above it lie 1.1200 and the 20 EMA, and a 4-hour close above 1.1200 would be the first sign that the pressure is easing. Support starts at 1.1047, then 1.1000, a psychological level where buyers may react. If that fails, 1.0950 and 1.0900 become the next targets, and the pair's 2025 lows would come back into view. Because momentum is already stretched after a 1.3% drop in two days, a pullback toward the 20 EMA is possible before the next leg lower, and swing traders may prefer to sell that retest with a stop above 1.1170 instead of selling at the lows. Watch the weekly close as well: finishing near the low would suggest sellers carry momentum into Monday.