A persistent wave of buying interest across global currency markets pushed the US Dollar to notch another winning week against its principal peers, placing significant downward pressure on the Euro. The EUR/USD currency cross recorded its fourth consecutive weekly decline, tumbling to an intraday low of 1.1215, a mark unseen since May 2025. Heading into the close of trade, the exchange rate stabilized near 1.1280 as the broader US Dollar Index (DXY) retreated slightly from multi-month peaks, though technical setups and macroeconomic forces suggest an eventual retest of the major 1.1000 round-number zone remains distinctly possible.
Revised Economic Expansion and Inflation Trends Shape Federal Reserve Outlook
Macroeconomic updates released during the week presented a picture of enduring domestic momentum alongside moderating consumer prices in the United States. Gross Domestic Product data revealed that second-quarter annualized growth was revised upward to 2.2%, stepping up from the prior estimate of 1.5%. Simultaneously, the Federal Reserve's closely monitored price metric, the Personal Consumption Expenditures (PCE) Price Index, delivered milder figures for August by remaining unchanged at 3.4% on a yearly basis. The earlier July reading also saw a downward revision from 3.7% to 3.4%. While this rate holds above the central bank's formal 2% inflation target, it reflects substantial cooling from the year's peak of 4%.
Labor market indicators offered contrasting signals regarding underlying employment strength. Figures compiled by ADP indicated that private firms added 90K payrolls in September, outpacing the consensus forecast of 70K. In contrast, the official Nonfarm Payrolls report showed an addition of just 29K positions in September, well behind the projected 90K figure, while the August count underwent a revision down to 133K from an earlier estimate of 162K. The domestic Unemployment Rate rose marginally to 4.2%, accompanied by an uptick in the Labor Force Participation Rate from 61.6% to 61.8%. Wage pressures showed signs of stabilization as Average Hourly Earnings grew by 3% year-over-year, settling slightly below the anticipated 3.2% consensus.
These developments altered market expectations concerning future policy decisions by the Federal Open Market Committee. Following the release of the cooler PCE price statistics, market participants significantly trimmed exposure to an interest rate hike at the upcoming meeting. Pricing models indicate that the probability of an interest rate increase on October 28 retreated to approximately 21%, falling sharply from projections exceeding 70% in the prior week. Even though elevated living costs remain an ongoing concern, institutional capital continues to operate on the premise that American economic performance will outpace that of rival industrialized nations.
Persistent Eurozone Inflation and European Central Bank Policy Adjustments
In Europe, price pressures moved in the opposite direction at the conclusion of the third quarter, accelerating faster than economists had projected. Despite aggressive monetary adjustments implemented by the European Central Bank, the single currency has struggled to establish positive momentum. Policymakers in Frankfurt have already implemented two interest rate increases earlier in the current year. Market participants broadly project at least one additional rate increase before the conclusion of the year, alongside expectations for three further rate hikes extending through 2027.
Geopolitical turbulence in the Middle East continues to act as a primary driver of broader global inflationary pressures. With diplomatic friction between the United States and Iran unresolved, market participants anticipate that inflation risks linked to energy supplies will persist across international trade corridors. For Europe, higher import bills for energy commodities present a severe economic headwind. Forward-looking attention is now turning toward upcoming scheduled releases, including the publication of the European Central Bank's Monetary Policy Meeting Accounts on Thursday and the preliminary release of the US Michigan Consumer Expectations Index for October on Friday.
Daily Chart Breakdown and Critical Support Thresholds
From a chart-based perspective, the short-term outlook for the EUR/USD pair remains heavily tilted to the downside despite Friday's mild intraday recovery. The pair continues to trade beneath its 20-day, 100-day, and 200-day Simple Moving Averages, situated at 1.1462, 1.1513, and 1.1609 respectively. The downward trajectory of the shorter moving average relative to the longer-dated lines reflects dominant selling pressure across multiple sessions.
Momentum oscillators corroborate this bearish structural tone. The Relative Strength Index stands near 26, rebounding modestly from deeply oversold levels but falling short of signaling genuine exhaustion among sellers. Concurrently, the Momentum indicator has edged upward while remaining trapped within negative territory, constraining near-term rebound attempts. On the topside, immediate resistance sits near the 100-week Simple Moving Average at 1.1360, followed by the 20-day average at 1.1462 and the 100-day line at 1.1513. On the downside, the 200-week Simple Moving Average at 1.1096 serves as vital structural defense; a decisive breakdown below this level could pave the way for a deeper descent toward the 1.1000 psychological barrier, extending a decline that has brought the pair well below its January peak of 1.2082.
Broader Financial Markets: Commodities, Currencies, and Digital Assets
Cross-asset performance mirrored shifting global yields and dollar movements across Friday trading. The AUD/USD pair rebounded toward 0.6950 during Asian trading hours as dollar gains moderated and traders factored in potential November rate hikes by the Reserve Bank of Australia amid elevated global inflation risks. Meanwhile, USD/JPY hovered near 158.00, retreating from weekly highs after Tokyo consumer price inflation exceeded expectations and the dollar faced localized profit-taking ahead of key employment data.
In commodities, spot gold was unable to maintain upward momentum above $4,200 per troy ounce following the Nonfarm Payrolls release, pulling back toward the $4,180 zone as traders evaluated conflicting economic indicators. Within the cryptocurrency space, positive sentiment returned on Friday as Bitcoin reclaimed territory above $86,000. Ethereum advanced past $2,700 with interim resistance visible near $2,800, while Ripple traded near $1.54. Global market focus will now transition to sovereign bond yield movements, the ongoing energy crisis, the US ISM Services PMI, Treasury debt auctions, Canadian labor statistics, and Japanese wage trends.
