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 1.1486, with 1.1600 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 1.1478 to 1.1481 on TwelveData and Investing.com, up about 0.15 per cent on a Wednesday close of 1.1464, in a session running 1.1456 to 1.1484. Wednesday’s scorecard: the bearish branch triggered and paid in full. The trigger was a daily close beneath 1.1520, and the euro closed at 1.1464 after a 1.1461 low, so both published objectives, 1.1500 and 1.1470, were reached on the day, while the bullish trigger above 1.1585 was never tested. That is the head and shoulders Ken drew on his Wednesday video completing through its neckline, with Kevin Warsh supplying the hawkish catalyst he said it needed. Ken’s new video is on this page; the zones here are carried forward from his Wednesday chart. The job this morning is the retest: the old neckline at 1.1500 to 1.1535 is now the ceiling, and a small bounce into it is normal behaviour after a break, not a reversal.
What changed. The Federal Reserve raised rates by 25 basis points to 3.75 to 4.00 per cent on Wednesday by 12 votes to none, its first hike under Kevin Warsh. The statement deleted the line blaming inflation partly on energy supply shocks and added that the move supports a timelier return to 2 per cent. The median dot now shows one more hike this year to 4.1 per cent and no cuts in 2027, against 3.8 and 3.6 in June. Warsh said he would be hard pressed to call financial conditions restrictive, so the Committee removed a dose of accommodation. On the Treasury’s own curve the 2 year rose 7 basis points to 4.74 per cent while the 30 year slipped to 5.35, a bear flattener, and the 10 year real yield rose 6 basis points to 2.68 while breakevens fell about 5. That is a market believing the Federal Reserve. CME FedWatch put an October hike near 51 per cent after the meeting. President Trump said rates should be 1 per cent or less. Overnight, Brent fell to about 103.5 to 104 dollars, from a 105.83 settle, on reports that Saudi Arabia can restore half of its East-West pipeline within days, while the average US diesel price set another record at 6.40 dollars a gallon. At 13:30 London, United States initial jobless claims fell to 196,000 against about 208,000 expected and the Philadelphia Fed manufacturing index printed 37.8 against 30.5, strong data that the dollar did not rally on. In Europe, final August inflation was due at 10:00 against a 3.3 per cent flash; Dutch gas prices eased to about 77 euros a megawatt hour but remain near three and a half year highs, with storage about 68 per cent full.
Main driver. The rate gap moved decisively against the euro on Wednesday. The Federal Reserve hiked with dots that keep policy at 4.1 per cent through 2027, the United States 2 year closed at 4.74, and the European Central Bank’s deposit rate is 2.50 after a hike that the euro sold on 10 September. On this desk’s decomposition the euro leg was more than half of the dollar index’s 0.70 per cent rise on Wednesday, so this was not a yen story or a pound story; it was the transatlantic front end. The energy channel still leans the same way. The euro area imports the Gulf shock, gas storage is well below normal going into winter, and any further European Central Bank hike would be a response to an imported bill rather than to domestic strength. This morning’s bounce is mostly the dollar giving back a little and oil falling about 2 per cent, which helps an energy importer at the margin.
What the desk is watching. Whether 1.1500 turns from support into resistance. The old neckline zone from 1.1500 to 1.1535, which includes the 50 day average at 1.1535 on this desk’s settled closes, is where Wednesday’s sellers will defend, and a rejection there confirms the break. On the data side, United States jobless claims and the Philadelphia Fed at 13:30 test the October hike odds that moved to roughly even after the meeting. European Central Bank speakers matter more than usual now: any sign the October meeting is live would narrow the gap, but vendor pricing for October has been quoted in a wide range for two weeks, so do not trust a single number. Then Friday’s Bank of Japan decision, because a yen rally drags the whole dollar lower and can lift the euro without any change in Europe. Name that channel before calling it euro strength.
Key liquidity areas. Wednesday cleared the pool that had been building beneath 1.1520 for four sessions, and the stops underneath were taken in one move down to 1.1461. This morning’s 1.1456 low sits five pips beneath that, so there is now a small pool of equal lows at 1.1456 to 1.1461 protecting everyone who bought the post Federal Reserve dip. Beneath it the next resting orders sit at 1.1400, the round number, then 1.1323 to 1.1340, this desk’s swing low and the approximate measured target of Ken’s head and shoulders. Above, the sellers who shorted the break are protected over 1.1500 to 1.1535, the broken neckline and the 50 day average, then 1.1554 to 1.1557, the 100 day average and Wednesday’s high. Anyone still long from the neckline is trapped above 1.1520 and will sell a rally into it.
Key levels. Resistance begins at 1.1484 to 1.1501 which is this morning’s high, the round number and this desk’s 23.6 per cent of 1.2077 to 1.1323, then 1.1520 to 1.1535 which is Ken’s broken liquidity area and the 50 day average on this desk’s settled closes, then 1.1554 to 1.1557 which is the 100 day average and Wednesday’s high, then 1.1585 which is the old triple low, then 1.1614 which is the 20 day average. Support begins at 1.1456 to 1.1464 which is this morning’s low, Wednesday’s low and Wednesday’s close, then 1.1400 which is the round number, then 1.1323 to 1.1340 which is this desk’s swing low and the approximate measured target of Ken’s head and shoulders.
Key technical levels. Ken’s head and shoulders completed on Wednesday. The neckline across 1.1520 to 1.1535 broke on a close of 1.1464, a candle of about 95 pips from a 1.1557 high, and it took the 50 day average at 1.1535 with it, so every average on this desk’s settled closes now sits above price: the 50 day at 1.1535, the 100 day at 1.1554, the 20 day at 1.1614 and the 200 day at 1.1632. The measured move, the height of the head near 1.17 above the neckline, projects roughly 170 to 180 pips beneath the break, which lands at about 1.1340 to 1.1350, close to the 1.1323 swing low this desk’s retracement ladder is anchored on. The daily chart has now printed six lower highs since 9 September. A first bounce into a broken neckline is common; it is the close that decides whether the break holds.
What would invalidate the view. The bearish branch is live. It stays valid while the euro closes beneath 1.1535, the top of the broken neckline and the 50 day average, with 1.1400 and then 1.1323 to 1.1340 as the objectives. The clean version is United States data that keeps October hike odds near even or higher, the 2 year holding above 4.70, and a dollar index holding above 100.00. A daily close back above 1.1535 invalidates the break and says the head and shoulders failed, with 1.1557 and then 1.1585 back in play. The clean version of that is soft United States data, a hawkish turn from European Central Bank speakers, or a Bank of Japan hike that drags the dollar lower across the board. If the euro rallies while the dollar index falls and the 10 year Treasury yield rises, write it as dollar credibility weakness rather than euro strength.
Data and event risk. Thursday 17 September: the Bank of England held Bank Rate at 3.75 per cent at 12:00 by 6 votes to 3, with Megan Greene, Catherine Mann and Huw Pill voting to hike to 4 per cent, and said upside inflation risks have grown since July; next decision 5 November; United States jobless claims, the Philadelphia Fed survey and August housing starts at 13:30; pending home sales at 15:00; a 19 billion dollar 10 year TIPS reopening at 18:00, which tests whether buyers want the higher real yields the Federal Reserve just delivered. Friday 18 September: the Bank of Japan, with a hike to 1.25 per cent widely expected and no fixed release time, then Governor Ueda; UK retail sales at 07:00; United States industrial production at 14:15 and the leading index at 15:00; Governor Michelle Bowman speaks in London. Tokyo is shut from 21 to 23 September. United States August PCE inflation is on 30 September, and the next Federal Reserve decision is 28 October, the same day as Chancellor John Healey’s first Budget.
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). Driver in the feed: “BREAKING: President Trump publishes his “top 25 accomplishments of term three.” https://t.co/cyIeIECHUU (@TheKobeissiLetter)” (Kobeissi Letter).
| 1.1715 | round 1.17 + recent swing high |
| 1.1600 | 20 SMA daily + round 1.16 |
| 1.1542 | pivot R3 + 50 SMA daily + 5d POC |
| 1.1500 | prior day high + pivot R1 + round 1.15 |
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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