The EUR/USD pair closed Friday down 0.10%, but still notched a 0.51% weekly gain as fading risk appetite and shifting expectations around the Federal Reserve’s policy path shaped sentiment. Despite the session’s modest retreat, the pair held above the 1.1600 handle, leaving room for additional upside momentum.
Euro slips on Friday but secures weekly advance amid mixed Fed signals and steady Eurozone growth
Since midweek, Fed communication has remained largely hawkish. Regional presidents including Beth Hammack, Raphael Bostic, Alberto Musalem, Susan Collins, Neel Kashkari and Jeffrey Schmid signaled support for maintaining a modestly restrictive stance.
Dovish voices, however, also emerged. Fed Governor Stephen Miran, San Francisco Fed President Mary Daly, and Governors Christopher Waller and Michelle Bowman highlighted signs of a cooling labor market, signaling caution against overtightening.
Fed Chair Jerome Powell and New York Fed President John Williams maintained a more neutral tone. Powell emphasized that a December rate cut is “not a foregone conclusion,” stressing data dependency as economic releases remain limited.
According to the Prime Market Interest Rate Probability tool, money markets now price a 56% chance of a 25 bp cut—down from roughly 70% one year earlier.
In the Eurozone, headline data showed Q3 GDP rising 0.2% quarter-on-quarter. Year-over-year growth was revised higher to 1.4% from 1.3%, offering a mild fundamental backdrop for the euro.
Daily market movers: Euro retreats as hawkish Fed commentary lifts the dollar
The US Dollar Index (DXY) edged 0.08% higher to 99.31. Fed Governor Stephen Miran reiterated his dovish view on Friday, arguing that recent data “should make the Fed more dovish, not less,” and warning that backward-looking indicators risk policy missteps.
In contrast, Kansas City Fed President Jeffrey Schmid repeated his rationale for dissenting against the most recent rate cut, saying his stance “continues to guide” his thinking into December. Schmid added that the current policy setting remains “only modestly restrictive” and appropriate for current conditions.
EUR/USD technical outlook: Pair holds firm near 1.1600
EUR/USD continues to trade with a mild bearish bias, with buyers struggling to break above the 50-day Simple Moving Average (SMA) at 1.1659. Still, short-term momentum is improving as the Relative Strength Index trends higher, signaling a pickup in bullish pressure. A clear break above the 50-day SMA would open the door toward the 1.1700 level.
On the downside, a drop below 1.1600 would bring immediate support at the 20-day SMA near 1.1583, followed by 1.1500. A sustained break of these levels could expose the August 1 cycle low at 1.1391 as the next bearish target.
