EUR/USD Market Report: October 6, 2025
As of 15:00 UTC on October 6, 2025, the EUR/USD pair is trading at 1.1725, marginally lower by 0.03% intraday. Despite the modest pullback, the pair remains above key technical supports amid ongoing U.S. fiscal uncertainty and delayed economic data releases. The prolonged U.S. government shutdown, now in its sixth day, has disrupted critical macroeconomic data flows, including the highly anticipated September Nonfarm Payrolls (NFP) report. The shutdown-induced USD weakness, combined with dovish Federal Reserve expectations and relative Eurozone stability, supports a bullish bias for EUR/USD in the near term.
Market Overview
1. U.S. Macro Backdrop: Shutdown Chaos and Fed Dovishness
The U.S. government shutdown, triggered on October 1 after Congress failed to pass funding legislation, has entered its sixth day. Bipartisan negotiations remain stalled, with Republican demands prolonging the impasse. This political gridlock has delayed key economic data releases, including the September NFP report, initially scheduled for October 3. Pre-shutdown forecasts suggested a weak labor market, with expectations of fewer than 30K jobs added and unemployment rising above 4.3%.
The Federal Reserve’s dovish stance further compounds USD weakness. Following the September 17 FOMC meeting, where the Fed cut rates by 25 basis points to 4.00%-4.25%, policymakers signaled two additional rate cuts by year-end. The Fed minutes highlighted labor market softening and balanced risks, reinforcing market expectations of further easing. Shutdown-induced delays in economic data only strengthen these dovish bets, with Fed funds futures pricing in a 75% probability of a November rate cut.
2. Eurozone Dynamics: Moderate Stability with Risks
In contrast to U.S. fiscal turbulence, the Eurozone exhibits relative stability despite signs of economic stagnation. The September flash CPI rose to 2.2% year-over-year (from 2.0%), slightly above the European Central Bank’s (ECB) target of 2%. However, core inflation remains sticky at 2.7%, supporting the ECB’s decision to maintain its deposit rate at 2.00%. Eurozone Q2 GDP growth was an anemic 0.1%, underscoring the region’s sluggish recovery.
Upcoming data releases, including German industrial production (October 7) and Eurozone retail sales (October 8), may shed light on economic trends but are unlikely to shift the ECB’s cautious stance. Declining energy prices provide a tailwind for the euro, while persistent geopolitical tensions in the Middle East add volatility to risk sentiment without significantly altering the EUR/USD narrative.
3. Trade Balances and Geopolitical Considerations
The U.S. trade deficit widened in July, contrasting with consistent Eurozone trade surpluses. However, the shutdown has delayed fresh U.S. trade data releases, further clouding USD sentiment. Moreover, geopolitical risks, including Middle East tensions, have eroded the dollar’s traditional safe-haven appeal, fostering risk-off flows that paradoxically favor the euro due to its perceived relative stability.
Deep-Dive Analysis: Technical Outlook
Multi-Timeframe Analysis
- Weekly Chart:
- The bullish structure remains intact following a breakout above a long-term channel.
- Price holds above the 50-week moving average (1.1700), with RSI(14) at 59 indicating neutral-positive momentum.
- Volume is tapering on the current pullback, signaling consolidation rather than a reversal.
- Daily Chart:
- EUR/USD is holding above the critical 50-day moving average at 1.1720.
- MACD histogram is flattening near zero (0.0020), reflecting indecision amid NFP-related volatility.
- A higher low at 1.1680 confirms bullish resilience.
- Intraday (1H):
- Price is testing a key order block (OB) around equilibrium (~1.1720-1.1740), following a break of structure (BOS) higher from the September 30 low.
- The pullback from the previous day’s high (PDH) at 1.1770 has grabbed liquidity below a fair value gap (FVG) near 1.1724 and rebounded to 1.1730.
- RSI(14) at 52 indicates consolidation within an ascending channel originating from the September low of 1.1640.
Key Support/Resistance Levels
- Support:
- 1.1720: Confluence of the 50-day MA and intraday OB equilibrium.
- 1.1700: Weekly BOS level and psychological threshold.
- 1.1640: Strong low and channel bottom.
- Resistance:
- 1.1770: Previous day’s high and intraday OB high.
- 1.1800: Premium zone and key Fibonacci retracement level (61.8%).
Patterns and Potential Setups
- A bullish BOS resolution on the hourly chart suggests potential upside continuation.
- A flag pattern is forming between 1.1720-1.1740, targeting a breakout toward higher resistance levels.
- A potential inverse head-and-shoulders pattern could emerge if price reclaims 1.1770.
Risk & Opportunity Assessment
Downside Risks
- Prolonged U.S. shutdown: While initially USD-negative, prolonged fiscal paralysis could trigger broader risk aversion and weigh on EUR/USD.
- Weak Eurozone data: Disappointing German industrial production or retail sales figures could revive concerns about Eurozone stagnation.
Upside Opportunities
- Shutdown resolution: A temporary funding agreement could release delayed U.S. data, confirming labor market weakness and reinforcing dovish Fed expectations.
- NFP weakness: A soft jobs report would amplify rate-cut bets, further pressuring the dollar.
Actionable Recommendations
Trade Setup: Long EUR/USD
- Entry Zone: Buy between 1.1720-1.1730 (retest of OB support).
- Stop-Loss: Place stops below 1.1680, accounting for ~40 pips of risk.
- Take-Profit Targets:
- Initial target: 1.1770 (PDH resistance; R:R ~1:1.2).
- Extended target: 1.1800 (premium zone; R:R ~1:2).
Positioning Strategy
- Maintain a bullish bias while monitoring U.S.-centric developments, particularly shutdown negotiations and NFP timing.
- For risk-averse traders, consider scaling out positions near interim resistance levels (e.g., 1.1750) to lock in partial profits.
Conclusion
EUR/USD remains poised for upside amid persistent U.S. fiscal uncertainty and dovish Federal Reserve expectations. While Eurozone economic softness tempers gains, relative stability and technical resilience above key supports bolster bullish momentum. Traders should focus on shutdown developments and delayed NFP data as potential catalysts for further upside toward 1.1770 and beyond.