Takeaway

The presenter argues that EUR/USD momentum is weakening into Q4 as central bank policy divergence favors the US dollar, with the Federal Reserve tightening faster than a growth-constrained European Central Bank. A confirmed weekly close below the critical 1.1355–1.1365 pivot zone would trigger a larger technical setback toward downside targets at 1.1228 and 1.1110–1.1164.

What the presenter said

• The Fed raised rates in September for the first time since 2023, with updated projections pointing to further tightening into year-end [00:11].
• Fed funds futures are pricing in roughly a 67% probability of another 25 bps hike in October and a 50/50 chance for December [00:21].
• The ECB has hiked twice this year, but Christine Lagarde noted growth risks are weighted to the downside while inflation risks are to the upside, potentially capping further ECB tightening [00:31, 00:42].
• Relative tightening speed keeps the macro policy backdrop in favor of the US dollar into Q4 [00:55].
• EUR/USD closed Q3 testing a major pivot zone at 1.1355 (the 38.2% retracement of the 2025 advance), while monthly RSI is at its lowest levels since March 2025 [01:05, 01:23].
• A monthly close below 1.1355 alongside monthly RSI breaking below 50 would signal a much larger EUR/USD decline [01:33].
• The >3.4% rally off the Q3 outlook low failed directly at the 75% pitchfork parallel off the 2026 highs [01:59].
• A weekly close below 1.1365–1.1355 opens downside targets at 1.1228 and 1.1110–1.1164 [02:32].
• Bearish continuity requires rallies to hold below initial resistance at 1.1578, while the broader downtrend is invalidated on a move above 1.1680 [02:57, 03:05, 03:24].

Trade ideas

• EUR/USD (Short)
  • Thesis: Divergent policy favors the USD as ECB growth risks constrain rate hikes, paired with a breakdown of major technical support.
  • Entry: Confirmed weekly close below 1.1355
  • Target: 1.1228, then 1.1110–1.1164
  • Stop: Above 1.1578 (or 1.1680 for full invalidation)
  • Horizon: Short-term
  • Conviction: High

Levels and data cited

• 1.1355: Key pivot (38.2% retracement of the 2025 advance; confirmed monthly/weekly break triggers downside).
• 1.1365: Pivot (April high week reversal close from last year).
• 1.1228: Downside target (2023 high close).
• 1.1110–1.1164: Primary downside support zone (38.2% retracement of the 2022 advance, 2024 high week close, May low week close from last year).
• 1.1578: Initial resistance and 2026 pivot (January low; must cap rallies to keep bearish pressure intact).
• 1.1680: Invalidation level (August high week close).
• Fed funds futures: 67% chance of an October rate hike; 50/50 chance for December.

Risks and what would invalidate this

• A close above 1.1680 (August high week close) would invalidate the downtrend and indicate a more significant low is in place.
• ECB inflation risks remain weighted to the upside, while euro area growth outlook risks are weighted to the downside.