EURUSD Price Prediction: Neutral Tone Amid U.S Uncertainty

EUR/USD in stuck in familiar territory. After two straight sessions of losses, the pair is holding around 1.1720 in Asia on Friday. Traders are hesitant to place strong bets, with Washington’s political deadlock muddying the near-term outlook and robbing the market of clear directional cues. Until that fog clears, price action is likely to remain choppy, with the pair moving sideways rather than trending.

Washington Paralysis Keeps Traders on Edge

The U.S. government shutdown is entering its third day and has quickly become the key macro story. Non-essential services have ground to a halt, hundreds of thousands of federal employees are on unpaid leave, and neither the White House nor the Senate appears close to compromise.

This matters for the dollar. A short shutdown can be shrugged off, but if the standoff stretches into weeks, faith in U.S. governance begins to erode. This doesn’t just weigh on sentiment; it risks long-term damage to the dollar’s status as the world’s safe haven. Right now, the dollar is holding up, but the cracks are visible.

Data Risks, Fed in the Dark

The shutdown also throws a wrench into the economic calendar. With the Bureau of Labor Statistics unable to operate fully, Friday’s Nonfarm Payrolls release may not even happen. That leaves the Fed without its most important labor market signal at a time when the case for further rate cuts is already building.

Markets are leaning heavily toward two additional Fed cuts this year, and without fresh data, it becomes harder for the central bank to resist. Lower yields make dollar assets less attractive, which is why EUR/USD has scope to grind higher if the gridlock continue.

ECB: Holding Neutral Ground

The ECB, meanwhile, is playing it safe. Christine Lagarde’s latest remarks struck a balanced tone, inflation risks are contained, growth is holding up despite external shocks, but the bank won’t rush to ease policy again.

September inflation ticked up to 2.2% from 2.0% in August, enough to keep policymakers cautious. Market pricing reflects that caution: the odds of a rate hold at the October 28 meeting are above 98%. In relative terms, the ECB’s stability contrasts with the Fed’s dovish lean, which could gradually tilt flows back toward the euro.

Technical Landscape: Range-Bound, Waiting for a Break

The chart tells the story of indecision. EUR/USD has been moving sideways, caught between clear support and resistance.

• Resistance Zone (1.1803 – 1.1819): Sellers have defended this band consistently. A break above would be significant, opening the way to 1.1880 and possibly a retest of the yearly highs near 1.1918.
• Support Zone (1.1642 – 1.661): Buyers continue to show up here. A decisive close below 1.1640 would be a bearish signal, putting 1.1600 back in view.
• Current Price Action: As the chart notes, the market is still “ranging”, waiting for clear direction.” Both sides are testing the edges, but conviction is missing.

In short, the pair is boxed in. Until the U.S. political drama plays out or the Fed gets clarity on data, range trading will dominate. Breakouts will need a catalyst.

Outlook: Neutral Bias, Tilt Toward Euro

The near-term story is one of patience. Traders are unwilling to commit until the shutdown’s duration is clear. But beneath the surface, the risks lean against the dollar. If the shutdown drags on and data remains disrupted, confidence in U.S. policy could take a bigger hit. The ECB’s steady stance only reinforces the contrast.

For now, EUR/USD remains neutral. But in a market where neutrality rarely lasts long, the balance of probability suggests that when the breakout comes, it may favor the euro.

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