# Dollar Strength Drags Euro to Fresh Lows Near 1.1425 as Fed Stance Weighs

> The EUR/USD pair slipped toward 1.1425 in Asian trade, marking its weakest point since July 29 under pressure from a resilient greenback and German political uncertainty.

**Type:** article · **Category:** Market · **Published:** 2026-09-23 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/market/us-dollar-ki-mazbooti-se-eur-me-girawat-july-ke-baad-1-1425-ke-naye-nichle-star-par-fisli-currency-36886 · **Language:** English
**Tags:** EUR USD, Forex Market, Federal Reserve, US Dollar, Currency Exchange, Bank of Japan, Gold Price, finance

Selling momentum around the EUR/USD pair extended into a third consecutive trading session on Wednesday, pushing the exchange rate down to touch 1.1425 during Asian trading hours. The move represents the pair's lowest level since July 29, driven by an unyielding US Dollar and mounting political risks emerging from Germany. The convergence of diverging monetary policy expectations and geopolitical developments has kept market participants cautious across major currency pairs.

Live market metrics reflect the pair changing hands near 1.14, having declined 0.29% from the previous close of 1.15. Across the past 52 weeks, the currency pair has traded between 1.13 and 1.20, with trading volume currently tracking at 1.00x its 20-day average. Technical indicators show the 14-day Relative Strength Index (RSI) at 30, signaling an oversold condition. Concurrently, a death cross pattern is visible with the 50-day EMA at 1.15 trading below the 200-day EMA at 1.16, underlining a sustained long-term downward trajectory. Price action has also breached below the lower Bollinger Band of 1.14, underscoring intense downside momentum.

## Federal Reserve Trajectory and Broad Dollar Dominance
The greenback's resilience across global markets is underpinned by a hawkish posture from the Federal Reserve. Capital expenditure into artificial intelligence infrastructure has entered policymakers' inflation considerations, lifting market-implied odds of an October rate increase above even money. On Monday, the market priced this identical AI buildout at two distinctly different costs of capital, illustrating heightened macro sensitivity. Currency performance metrics reveal that the US Dollar outperformed major peers throughout the week, recording its steepest relative gain against the Canadian Dollar.

In contrast, the European landscape faces intensifying fiscal and political hurdles. Political fragility within Germany continues to diminish appetite for the single currency. Meanwhile, French credit default swaps (CDS) have widened to their highest levels since 2020, and the United Kingdom saw its fiscal headroom contract by half ahead of forthcoming budget releases. These European headwinds have compounded the Euro's disadvantage against a rallying US Dollar.

## Key Chart Hurdles and Technical Breakdown
From a chart perspective, the Moving Average Convergence Divergence (MACD) remains entrenched in negative territory, highlighting persistent downward pressure. Any recovery attempts are anticipated to encounter initial resistance around the 61.8% Fibonacci retracement mark at 1.1474. Beyond that threshold, the 50.0% retracement level at 1.1519 and the 100-day simple moving average (SMA) at 1.1540 stand as secondary barriers. Additional resistance zones are aligned at the 38.2% retracement of 1.1563 and the 23.6% level at 1.1619, before reaching the broader cycle high around 1.1708.

On the downside, initial technical support is positioned near the 78.6% Fibonacci retracement at 1.1410. A decisive breakdown beneath this marker would expose the major structural support base defined by the previous swing low around 1.1329. The technical landscape is further detailed by an ADX reading of 28, confirming trend strength, alongside Stochastic metrics showing the fast line at 1 and the signal line at 9. Pivot points place central baseline support and resistance near 1.14, with secondary resistance at 1.15.

## Cross-Currency Action Across Asian Trading Sessions
The dollar's upward path exerted corresponding downward pressure on other major foreign exchange instruments. The AUD/USD pair faced renewed selling, testing the 0.7100 handle during Wednesday's Asian trading session. Flash Purchasing Managers Index (PMI) data out of Australia showed the manufacturing sector slipping into contraction territory, while services expanded at a sluggish pace for a second straight month. Currency traders are largely staying on the sidelines ahead of the high-stakes summit between US President Donald Trump and Chinese President Xi Jinping scheduled for Thursday, looking past the conclusion of indirect talks between the United States and Iran.

Concurrently, USD/JPY hovered around the mid-157.00s, staying close to the two-week peak logged last Friday. The Bank of Japan (BoJ) implemented an anticipated interest rate hike, raising its short-term rate target from 1.00% to 1.25% in a 7-2 vote. Nevertheless, the dovish delivery of the decision left the Japanese Yen broadly uninspired, although the threat of official currency intervention from Tokyo has helped cap sharper upside moves in the pair. Elsewhere, Iranian President Pezeshkian's presence in New York included Gulf meetings, without any scheduled bilateral engagements with Washington.

## Precious Metals Retreat Ahead of Trump-Xi Summit
The commodity complex reacted in tandem to the currency fluctuations, with gold coming under fresh selling pressure during Asian trading hours on Wednesday. Bullion traded near $4,350 per ounce, giving back part of the ground gained during its previous bounce from levels below $4,300. Traders across the gold market refrained from establishing significant directional exposures, choosing instead to await the diplomatic discussions between President Donald Trump and President Xi Jinping later in the day.

## What this means for you
The persistent strength of the US Dollar and the slump in the Euro carry tangible ramifications for cross-border transactions, trade hedging, and investment allocations.

- **For Currency Traders and Portfolio Managers:** Key technical cushions at 1.1410 and 1.1329 represent vital downside risk thresholds. Market participants should monitor potential volatility spikes surrounding central bank rhetoric and the Trump-Xi diplomatic meetings.
- **For Travelers and International Students:** Euro weakness offers relative cost stability for expenditures denominated directly in European currency. Conversely, any obligations pegged to the rallying US Dollar face elevated costs and tighter budgetary constraints.
- **For Global Importers and Exporters:** Dollar-denominated procurement of commodities and industrial components becomes more expensive globally. Businesses trading with European partners must evaluate foreign exchange risk and consider active forward contracts.
- **For Commodity and Gold Investors:** Bullion momentum faces headwinds near $4,350 as capital flows toward dollar-denominated assets. Physical buyers and derivatives traders should anticipate rangebound price action until the upcoming political summits conclude.

## Why this happened
The decline in the EUR/USD exchange rate stems from a combination of robust monetary tightening expectations in the United States and emerging structural risks across Europe.

- **Hawkish Federal Reserve Expectations:** Strong consideration of AI capital expenditures within US inflation assessments has bolstered market projections for an October interest rate increase. This policy outlook continues to channel global liquidity into the greenback.
- **European Political and Credit Vulnerabilities:** Heightened political uncertainty in Germany has curtailed confidence in European economic stability. Furthermore, French credit default swaps reaching post-2020 peak levels have escalated perceived credit risks across the Eurozone.
- **Global Growth Divergence:** Economic indicators from regional trading partners show persistent friction, evidenced by weak Australian PMI numbers and contracting fiscal headroom in the UK. This environment favors defensive positioning in the US Dollar over risk-correlated currencies.

## Questions & Answers

### 1. What level did the EUR/USD exchange rate reach?
The EUR/USD pair fell to around 1.1425 during Asian trading on Wednesday, hitting its lowest point since July 29.

### 2. What is driving the strength of the US Dollar?
A hawkish stance from the Federal Reserve and expectations of an October rate increase driven by AI capex considerations have propelled the greenback.

### 3. What are the primary downside support levels for the Euro?
Immediate support sits near 1.1410, with a major structural floor identified around the previous swing low of 1.1329.

### 4. What decision did the Bank of Japan make regarding interest rates?
The Bank of Japan lifted its short-term interest rate target from 1.00% to 1.25% via a 7-2 vote.

### 5. How did gold prices react to the currency movements?
Gold experienced fresh selling pressure and traded near $4,350 per ounce as traders awaited the Trump-Xi summit.

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