- EUR/USD rebounded to around 1.1265 on Friday after touching 1.1215, its weakest level since May 2025, but the broader euro-dollar trend remains under pressure.
- The US dollar is near a 17-month high as elevated Treasury yields and concerns over France's fiscal outlook continue to weigh on the euro and European bond markets.
- US nonfarm payrolls are the next major EUR/USD catalyst, with economists expecting 90,000 new jobs in September and unemployment to remain at 4.1%.
EUR/USD staged a modest recovery on Friday, October 2, after a brutal stretch of selling pushed the euro to its lowest level against the US dollar in 17 months.
The euro-dollar exchange rate traded around 1.1265 during Friday’s European morning, according to the latest TradingView chart, recovering from an October 1 low near 1.1215. The hourly chart shows EUR/USD moving back above its 20-period moving average near 1.1248, although the pair remains substantially below levels seen earlier in September.
The recovery has done little to change the bigger picture. Reuters reported Friday that the US dollar is hovering around a 17-month high and is heading for a third consecutive weekly advance as turmoil in global bond markets, fiscal concerns in France and persistent inflation risks weigh on European assets.
Why Is EUR/USD Falling?
The latest EUR/USD decline is increasingly a story about bond markets. The benchmark 10-year US Treasury yield surged to 5.34% on Thursday, its highest level in 24 years, following the steepest quarterly rise in Treasury yields in 32 years. Yields eased from those extremes on Friday but remained elevated around 5.25%.
Higher US yields have helped the dollar even as traders scale back expectations for an immediate Federal Reserve rate hike.
The dollar is now heading for a weekly gain of roughly 1%, while EUR/USD has suffered four consecutive weekly declines. The euro also recorded its worst monthly performance since July 2025 in September. That combination has turned EUR/USD today into one of the forex market’s most closely watched trades ahead of the US jobs report.
France Fiscal Concerns Add Pressure to the Euro
The euro’s problems extend beyond the US dollar. Investors have been selling French government bonds amid growing concern about France’s fiscal position. The spread between French and German 10-year government bond yields widened beyond 140 basis points, reaching its highest level since 2012.
France’s proposed 2027 budget failed to calm those concerns, adding another layer of uncertainty for European markets. The fallout has spread beyond EUR/USD. The euro recorded its steepest one-day decline against the Swiss franc since April 2025 on Thursday, according to Reuters.
High energy prices are another complication. Brent crude remains around $102 per barrel, keeping inflation risks elevated for the energy-importing eurozone and limiting the European Central Bank’s room to respond to weaker economic conditions.
Eurozone Inflation Keeps ECB Outlook in Focus
Inflation is complicating the euro outlook rather than providing straightforward support. Euro-area annual inflation had already accelerated to 3.2% in August from 2.9% in July, with energy making a significant contribution to the increase, according to Eurostat.
That leaves the ECB balancing persistent price pressure against weaker growth risks and tightening financial conditions. For EUR/USD traders, the important point is that higher European inflation has not automatically translated into a stronger euro. Fiscal concerns and the selloff in European bonds have instead dominated recent trading.
EUR/USD Forecast Ahead of US Nonfarm Payrolls
Attention now turns to the September US nonfarm payrolls report, one of the biggest potential catalysts for the EUR/USD forecast.
Economists surveyed by Reuters expect the US economy to have added 90,000 jobs in September, slowing sharply from 162,000 in August. The unemployment rate is forecast to remain unchanged at 4.1%, while annual wage growth is expected to edge up to 3.2%.
The report matters because expectations for another October Fed hike have fallen dramatically. Markets currently assign only around a 28% probability of another rate increase at the October 27-28 Federal Reserve meeting, down from roughly 69% a week earlier after cooler inflation readings.
A stronger-than-expected jobs report could revive Fed tightening expectations and push Treasury yields higher again. A weak payroll number could instead reinforce expectations that the Fed will wait before raising rates again.
Either outcome gives the EUR/USD price plenty of room for volatility.
EUR/USD Technical Analysis: 1.1248 Turns Into Near-Term Support
Friday’s chart offers the first tentative signs of a EUR/USD recovery. After bottoming near 1.1215, the pair has climbed back toward 1.1265 and moved above the 20-hour moving average at approximately 1.1248.
Momentum is also improving. The hourly MACD histogram has turned positive, while the MACD line has crossed above its signal line. That suggests the intensity of the recent selling has eased, although both lines remain below zero and the broader September downtrend is still visible.
The immediate EUR/USD support levels are therefore around 1.1245-1.1250, followed by the recent low around 1.1215 and the psychological 1.1200 level.
On the upside, a sustained move through 1.1300 would give the recovery more weight. Until then, Friday’s advance looks more like a rebound from heavily sold levels than a confirmed reversal of the broader EUR/USD downtrend.
The near-term EUR/USD outlook will depend heavily on US payrolls, Treasury yields and Fed rate expectations. Technically, reclaiming 1.1300 would strengthen the current rebound, while a move back below 1.1215 would expose the 1.1200 area.
EUR/USD was trading around 1.1265 on October 2, recovering from a 17-month low near 1.1215 reached during the previous session.
EUR/USD has fallen as elevated US Treasury yields support the dollar while French fiscal concerns, high energy prices and weakness in European bond markets weigh on the euro.