EUR/USD Extends Losses as Dollar Strength Is Questioned :: InvestMacro

By RoboForex Analytical Department

The EUR/USD pair declined further on Tuesday, edging towards 1.1512. This downward movement persists despite a recent bout of US dollar weakness, which was triggered by a series of dovish comments from Federal Reserve officials that significantly increased the likelihood of an imminent rate cut.

The shift in sentiment was led by Governor Christopher Waller, who expressed support for a December cut, citing mounting risks to the labour market. Other officials, including Mary Daly and John Williams, echoed his stance. Waller also emphasised that policy decisions in 2026 will be contingent upon a large volume of delayed economic data, which agencies are now beginning to publish following the end of the government shutdown.

This coordinated messaging has caused a dramatic repricing in interest rate futures. The market-implied probability of a 25-basis-point cut in December has surged to 81%, a substantial increase from just 42% a week ago.

Despite this dovish tilt, the US dollar has demonstrated resilience. Investor focus is now shifting to a slew of upcoming data releases, including reports on retail sales, PPI, durable goods orders, and weekly jobless claims, which will provide a clearer picture of the US economy’s health.

Technical Analysis: EUR/USD

H4 Chart:

On the H4 chart, EUR/USD is forming a tight consolidation range above the key support at 1.1510. The current structure suggests a high probability of a technical correction towards 1.1588, with the potential to extend this rebound to 1.1616. However, a decisive downward breakout from this range would signal the resumption of the primary downtrend, activating the next bearish impulse with an initial target at 1.1488. The MACD indicator technically supports this scenario. Its signal line is below zero but is pointing upwards, indicating building momentum for a short-term correction within the broader bearish environment.

H1 Chart:

On the H1 chart, the pair completed a growth wave to 1.1549 before declining to 1.1510, forming a consolidation range around 1.1530. An upward breakout could initiate another leg higher towards 1.1568, potentially extending to 1.1616. It is crucial to view any such strength as a corrective rally before the larger downtrend resumes, targeting a move back towards 1.1500. Conversely, a downward breakout would directly activate the bearish potential for a decline to 1.1488, a level that could mark the completion of the first phase of the third wave within the broader downward trend. The Stochastic oscillator aligns with the near-term corrective view, as its signal line has turned up from the 20 level, suggesting room for a bounce towards 80.

Conclusion

While dovish Fed rhetoric has injected volatility and capped the dollar’s gains, the EUR/USD remains in a fragile technical position. The immediate outlook hinges on the pair’s ability to hold the 1.1510 support. A break higher would trigger a corrective rally towards 1.1616, offering a potential selling opportunity. However, a failure to hold this level would open the path for a more pronounced decline towards 1.1488 and possibly lower, reaffirming the underlying bearish trend.

Disclaimer:

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.