EURUSD weekly forecast: the euro continues to strengthen

The US government shutdown remains the main source of uncertainty in the currency market. Federal agencies continue to operate in a limited capacity, and the release of key macroeconomic data, including the jobs report, has been postponed. This deprives the market of guidance and increases volatility, reducing demand for the US dollar as a safe-haven asset.

For the EURUSD pair, the key factor is a combination of political pressure in the US and euro weakness amid uncertainty in the eurozone. At the same time, the euro is attempting to regain lost ground.

This overview examines how the shutdown and expectations regarding the Fed’s decisions may influence EURUSD dynamics from 20 to 24 October.

EURUSD forecast for this week: quick overview

• Market focus: market pressure comes from the ongoing US government shutdown. Negotiations between Democrats and Republicans over government funding are ongoing
• Current trend: the EURUSD pair is trading around 1.1700, under pressure from political uncertainty in Europe and the US. Recovery attempts are limited to US economic indicators. The technical picture points to continued euro gains towards 1.1800
• Outlook for 20–24 October: the baseline scenario suggests growth towards the 1.1800 level with occasional corrections. A breakout above 1.1800 would increase pressure on the euro, opening the path to 1.1850–1.1900

EURUSD fundamental analysis

Last week, the US dollar suffered significant losses. The EURUSD pair still has upside potential, driven by the lack of clarity in US fiscal policy.

The US government shutdown continues. It has halted the publication of key macroeconomic data, including the employment report, and has increased market uncertainty. The probability of a Federal Reserve rate cut at the 29 October meeting is estimated at 95%, with the market partially pricing in another cut in December.

The euro is supported by moderately positive eurozone data, with easing inflation and growth in the Consumer Price Index offsetting industrial production weakness. However, political instability in France is affecting the euro.

EURUSD technical analysis

On the daily timeframe, the EURUSD pair is consolidating near 1.1710 after rising from 1.1555. The dynamics suggest an attempt to stabilise after a sharp decline, and the overall technical background remains bullish.

The key resistance level is at 1.1750, where the first significant buyer pullback may occur. The next resistance is at 1.1860. A consolidation above this level would trigger further upward movement.

The Stochastic Oscillator is heading towards overbought territory, signalling a potential continued rise, although not yet confirmed by volume. MACD is also forming an upward wave towards the zero line, indicating strengthening momentum.

The price is testing the middle Bollinger Band, which may serve as an additional signal for growth. Overall, the pair has strong potential to continue its uptrend.

EURUSD trading scenarios

The EURUSD pair is consolidating near 1.1700 after rising from 1.1555. It remains under pressure from political uncertainty in the US and the eurozone. MACD is moving towards the zero line, the Stochastic Oscillator is climbing towards overbought territory, and the price is testing the Bollinger midline, pointing to potential further growth.

The US government shutdown continues to generate uncertainty, but demand for the dollar as a safe-haven asset persists. Political instability in France also limits the euro’s upside.

• Buy scenario

Long positions are viable on a pullback to 1.1660.

Targets: 1.1750

Stop-loss: below 1.1610

• Sell scenario

Short positions are relevant if the price breaks below 1.1555.

Targets: 1.1440 and 1.1388

Stop-loss: above 1.1600

Conclusion: the baseline scenario suggests consolidation around 1.1700 with growth potential, pending the Fed's decision.

Summary

Overall sentiment for the EURUSD pair is moderate. The main source of uncertainty is the US government shutdown. No compromise has been reached in Congress, and the publication of key macroeconomic data remains on hold. This puts pressure on the US dollar and creates room for the euro to recover.

From a technical perspective, the pair is consolidating near 1.1710, maintaining the potential to rise towards 1.1800–1.1850, and possibly to 1.1915 if a breakout occurs. However, fundamental factors remain constraining. According to the baseline scenario for 20–24 October, the pair will likely hold above 1.1700, maintaining upside potential.

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