EUR/USD Forecast 2026: ECB vs Fed Desk Read
The eur usd forecast hinges on the ECB versus Fed rate gap and relative growth. EUR/USD trades at 1.1201, with 1.1200 the nearest level the market has defended. Ken’s desk note for this session has not published yet, so the read below is the standing framework and an automated levels scan, not today’s desk view. Live levels and scenarios are below.
Ken’s Take. The euro is about 1.1245, up about 0.2 per cent on a Monday close of 1.1220, after Monday’s low at 1.1162, the lowest level since May 2025. The scorecard since Ken’s last video: on Friday the desk had closed its euro shorts ahead of payrolls just short of the 1.12 objective, and Ken’s zone for a pullback lower high was 1.1300 to 1.1320. The payrolls bounce stopped at 1.1286, never reached that zone, and on Monday the euro broke through 1.12 into the 1.11s, so the objective was delivered after the trade was off. Ken’s video for today is on this page. His call: the dollar is still ripping higher despite the cracks in last week’s jobs data, because the 2 year and 5 year have eased but the 10 year and 20 year are still elevated, October is down to about a 20 per cent chance but December is still high, and the United States still has an inflation problem, with the ISM services prices index above 70 for the sixth or seventh month running. The United States is still outperforming its peers and the dollar has the deepest liquidity, so he still favours the dollar. Euro rallies toward 1.1250 to 1.13 are for selling, and a break of the liquidity beneath opens 1.08. Cable is in a range from 1.32 to 1.33, with a break of 1.32 opening 1.30. Gold is in a range of about 100 dollars; he would like a liquidity grab toward the 4,200 highs to be rejected, with 4,000 the liquidity in his sights and 3,500 beneath it if that breaks. His one warning: the dollar has moved in one direction for a long time, which leaves it open to profit taking, but a correction only counts once a low is taken out. The thing to notice this morning is that French bonds are rallying hard and the euro has barely moved.
What changed. Friday’s payrolls report was weak: 29,000 jobs in September against about 84,000 expected, unemployment up to 4.2 per cent, wage growth down to 3.0 per cent on the year and 60,000 jobs revised away from the previous two months. October hike odds on CME FedWatch collapsed to about 20 per cent from about 70 per cent a week earlier, but December is still priced for a hike. The front end eased and the long end did not: on the official Treasury close on Monday the 2 year was 4.84 per cent, the 10 year 5.31 and the 30 year 5.66, and the 10 year real yield hit 2.95 per cent, the highest of this cycle, while inflation expectations held flat near 2.36. On Monday the ISM services index slipped to 54.9, but its prices index jumped to 74.0, the highest since July 2022, with businesses complaining about fuel, and employment moved back above 50. The euro fell to 1.1162 on Monday, its lowest since May 2025, as the gap between French and German 10 year yields reached about 150 basis points, the widest since 2011, and Spain called a snap election for 29 November. Brent fell about 1.9 per cent on Monday to settle near 100.32 dollars after reports of an attack on a Saudi pipeline were contradicted, and it is just under 100 this morning. Bonds are bouncing this morning, led by France, and Bank of Japan Governor Ueda said underlying inflation is approaching 2 per cent but gave no signal of an October hike. In Europe, the French 10 year yield is down about 12 basis points this morning near 4.74 per cent, with no clear headline behind the move, which takes the gap over Germany back toward 130 basis points. European Central Bank President Lagarde said bond markets are orderly and that this is not 2008 or 2011, which markets read as no rush to support France. Money markets have trimmed European Central Bank hike pricing for the rest of the year, even with euro area inflation at 3.8 per cent.
Main driver. Sovereign risk and a passive central bank. Euro area inflation is 3.8 per cent, which would normally support the euro, but the European Central Bank is letting higher bond yields do some of its work and the market is pricing fewer hikes, not more. On top of that the euro is carrying a French fiscal risk premium: debt near 120 per cent of output, a deficit target of 5 per cent for next year and a political mood that makes consolidation hard, now joined by a snap election in Spain. Europe also imports the energy the United States exports. Against a United States that still pays nearly 3 per cent after inflation on 10 year debt, there is no reason yet for money to rotate back into the euro.
What the desk is watching. Where the bounce stops. Ken’s zone for a lower high and a liquidity grab is about 1.1250 up toward 1.13, and he does not expect it to reach 1.13; rallies into that zone are for selling while the structure holds. Watch whether this morning’s rally in French bonds carries the euro with it. If French spreads keep tightening and the euro still cannot get above Monday’s 1.1263 high, that is a bearish tell. If the euro catches up with the bonds, the bounce could stretch toward 1.1286 to 1.13 before sellers return. Lane and the European Central Bank account on Thursday are the next European tests.
Key liquidity areas. The pool under 1.12 has been taken, and Monday’s 1.1162 is now the line the market will hunt next. Beneath it Ken points to the next area of liquidity, which he says would need extra momentum to break, and then 1.0800 as the objective one step at a time. Overhead, sellers are protected above Monday’s 1.1263 high, then above Friday’s 1.1286, then above Ken’s 1.13 cap and Thursday’s 1.1337 lower high.
Key levels. Resistance begins at 1.1246 to 1.1263 which is this morning’s high and Monday’s high, the bottom of Ken’s 1.1250 to 1.13 zone, then 1.1286 which is Friday’s payrolls high, then 1.1300 which is Ken’s cap, then 1.1337 which is the 1 October lower high, then 1.1441 which is the 20 day average. Support begins at 1.1202 which is this morning’s low, then 1.1162 which is Monday’s low and the 2026 low, then 1.0800 which is Ken’s extended objective if the liquidity beneath breaks.
Key technical levels. A clean staircase of lower highs and lower lows. The rally highs since 23 September read 1.1451, 1.1410, 1.1395, 1.1380, 1.1337, 1.1286 and 1.1263, each beneath the last, and Monday’s 1.1162 made a new low for the year. Every average on this desk’s settled weekday closes sits above price: the 20 day at 1.1441, the 100 day at 1.1509, the 50 day at 1.1524 and the 200 day at 1.1606. The euro is about 1.7 per cent beneath its 20 day, so a bounce into 1.1250 to 1.13 would be a normal retest inside the trend rather than a reversal.
What would invalidate the view. The bearish branch is live. It stays valid while the euro holds beneath 1.1300 on a daily close, with a rejection inside Ken’s 1.1250 to 1.13 zone as the next lower high, then 1.1162 and Ken’s 1.0800 as the objectives. The clean version is French spreads widening again, weak Treasury auctions keeping United States real yields high and oil back above 102 dollars. A daily close above 1.1337 breaks the lower high sequence and invalidates the bearish structure. The clean version of that is a sustained rally in French bonds together with a European Central Bank that sounds worried about 3.8 per cent inflation.
Data and event risk. Tuesday 6 October: Bank of England policymaker Catherine Mann speaks at 09:30 London, the United States trade balance is at 13:30, Federal Reserve Vice Chair for Supervision Michelle Bowman speaks at 15:45 on regulation, and the Treasury sells 3 year notes at 18:00. Wednesday 7 October: the 10 year auction at 18:00 and the minutes of the September Federal Reserve meeting at 19:00; remember those minutes describe a meeting held before the weak payrolls report. Thursday 8 October: Federal Reserve Governor Christopher Waller on the economic outlook at 09:30, European Central Bank chief economist Philip Lane at 11:00, the account of the September European Central Bank meeting at 12:30, jobless claims at 13:30 and the 30 year auction at 18:00. Friday 9 October: the University of Michigan survey with inflation expectations at 15:00. Next week brings United States consumer and producer prices and retail sales, the big inflation test Ken flags in his video. The next Federal Reserve decision is 28 October, the same day as the UK Budget; the European Central Bank decides on 29 October, the Bank of Japan on 30 October and the Bank of England on 5 November.
Educational only, not financial advice. The note above is the desk’s read on the date shown. Trading is leveraged and most retail accounts lose money.
Cross-asset tape reads risk-on (dollar bias neutral, vol elevated). Key data: GB BOE Gov Bailey Speaks. Driver in the feed: “UK FCDO: Foreign Secretary Ed Miliband in Kyiv today to affirm UK’s steadfast backing for Ukraine” (Financial Juice).
| 1.1227 | daily pivot P + 21 EMA H4 |
| 1.1256 | round 1.125 + prior day high |
| 1.1285 | pivot R1 + prior week high + round 1.1300000000000001 |
| 1.1200 | pivot S1 + round 1.12 |
| 1.1162 | pivot S2 + round 1.1150000000000002 + prior week low |
| 1.1104 | round 1.11 + pivot S3 |
Levels from the desk’s six lens confluence scan, refreshed each session. Positioning structure, not a trade instruction. Trading carries risk; most retail accounts lose money.
What actually moves EUR/USD
EUR/USD is the world’s most traded pair and at heart it is a rate differential story. The euro tends to firm against the dollar when the market expects the European Central Bank to hold rates higher relative to the Federal Reserve, and it tends to soften when the Fed is expected to stay tighter for longer. That is why the pair reacts so sharply to inflation prints and central bank meetings on both sides of the Atlantic: each one reprices the gap between the two policy paths.
Relative growth and risk appetite layer on top. A stronger euro area growth surprise narrows the gap the market expects and supports the euro. Broad dollar strength in a risk off episode can override the rate story for a while, since the dollar is the world’s haven. The desk reads EUR/USD as the ECB path minus the Fed path, adjusted for who is growing and where global risk appetite sits.
How the desk reads the chart
EUR/USD respects clean horizontal structure and the big round figures, which makes the level map below the spine of the read. The near term bias stays constructive for the euro while price holds its nearest defended support and prints higher lows; it turns heavy when a support that held repeatedly breaks on a closing basis. The named levels are drawn from a six lens confluence scan, prior day and weekly extremes, round numbers, moving averages, pivots and the volume point of control, rather than from a single indicator.
This is positioning structure, not a trade signal. It shows where the market has defended price so you can build your own plan and risk around it.
Frequently asked questions
What is the EUR/USD forecast right now?
The live read at the top of this page is refreshed every session with the current EUR/USD rate, the day’s move and the nearest support and resistance from the desk’s level scan. Direction hinges on the ECB versus Fed rate gap: when the market expects the ECB to stay relatively tighter, the euro tends to firm, and the reverse when the Fed is expected to hold higher for longer.
What drives EUR/USD?
EUR/USD is mainly a rate differential trade. The euro firms when the European Central Bank is expected to hold rates higher relative to the Federal Reserve, and softens when the Fed is expected to stay tighter. Relative growth surprises and global risk appetite layer on top, with the dollar’s haven status able to override the rate story during risk off episodes.
Will EUR/USD go up in 2026?
That depends on the path of the rate gap. If the Fed eases faster than the ECB, the differential narrows in the euro’s favour and EUR/USD tends to grind higher. If the Fed holds while the ECB cuts, the dollar tends to win. The desk tracks both central bank paths and frames bias by structure rather than a fixed year end target.
What are the key levels for EUR/USD?
The named levels card above lists the current support and resistance zones, each from a six lens confluence scan and tagged with why it matters, for example a prior weekly high or a round figure. The levels refresh every session as structure shifts, so the page always shows the live map.
Is EUR/USD a buy at current levels?
The desk does not post buy or sell instructions here. It posts the structure: where the rate sits versus defended support and overhead resistance and what would flip the near term bias. Use that to frame your own plan and risk. Trading carries risk and most retail accounts lose money.
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Part of the Dollar and DXY Forecast hub, the desk’s living guide, kept current as markets move.