EUR/USD edged lower late Friday in the North American session as the US Dollar staged a recovery after bouncing off three-year lows in the wake of the Federal Reserve’s (Fed) rate cut. Rising US Treasury yields and renewed political unrest in France fueled demand for the Greenback, putting pressure on the pair.
Euro under pressure from Fed signals, higher yields and French unrest
At the time of writing, EUR/USD trades at 1.1747, down 0.32%, in a session marked by a quiet economic calendar on both sides of the Atlantic. Fed commentary remained in focus following Wednesday’s 25 bps rate cut, with officials signaling a generally neutral stance. The exception came from Fed Governor Stephen Miran, whose remarks leaned less dovish than his peers.
San Francisco Fed President Mary Daly struck a slightly dovish tone, pointing to labor market weakness, while Minneapolis Fed President Neel Kashkari sounded neutral but noted hikes could be considered if inflation or jobs data improve. Governor Miran highlighted that he represented the lowest dot in the Fed’s projections, adding that a larger cut would not have unsettled markets.
Meanwhile, in France, mass protests added further downside risk for the Euro. Hundreds of thousands gathered across major cities on Thursday, pressuring President Emmanuel Macron and new Prime Minister Sebastien Lecomu to abandon spending cuts proposed by former Prime Minister François Bayrou.
Upcoming data: US inflation gauge, GDP, jobless claims
Looking ahead, next week’s US economic calendar is packed with key releases. Markets will digest S&P Global flash PMIs, durable goods orders, weekly jobless claims, GDP data and the Fed’s preferred inflation measure—the Core PCE. A busy schedule of Fed speakers is also expected to keep the policy outlook in the spotlight.
Daily market movers: Dollar finds support
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Mary Daly reiterated that the Fed’s recent cut aimed to support a slowing labor market.
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Neel Kashkari said risks of rising unemployment justified the cut, while adding that inflation is unlikely to rise much above 3% from tariffs.
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Stephen Miran emphasized the need for rates to remain close to neutral, promising an updated review on Monday.
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The US Dollar Index (DXY) climbed 0.31% to 97.66.
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Weekly initial jobless claims fell sharply to 231K, below expectations of 240K and down from the prior week’s 264K.
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The Philadelphia Fed Manufacturing Index rebounded strongly to 23.2 in September, far exceeding forecasts of 2.3 and pointing to solid momentum.
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Futures markets now price a 90% chance of another 25 bps cut this month, with nearly 80% odds of a further reduction in December.
Technical outlook: EUR/USD pulls back but bias remains bullish
EUR/USD eased after recent gains, with an “evening star” candlestick pattern suggesting weakness in the Euro. Bears have yet to break below the September 11 low at 1.1659, but momentum is tilting in their favor. A decisive move under 1.1700 could open the way toward the 100-day SMA and the August 27 low near 1.1560–1.1574.
Still, the Relative Strength Index (RSI) points to resilience in the broader uptrend, staying comfortably away from overbought territory. On the upside, a rebound above 1.1800 could pave the way for 1.1850, with scope to retest the year-to-date peak at 1.1918.
