Forex Analysis

Morning Overview

On Thursday morning, 8 Oct 2026, at 06:30, EUR/USD was trading at 1.1260, down -0.03% compared to the previous close of 1.1263. The day's trading range has been fairly narrow, between 1.1259 (low) and 1.1266 (high), reflecting a market still waiting for clearer direction ahead of more significant news events expected to hit later this week. Looking at other major pairs, GBP/USD, USD/JPY and USD/CHF are all moving within similarly narrow ranges, with only USD/CAD edging slightly higher at +0.04%, suggesting the overall Forex market this morning remains in a sideways, wait-and-see mode.

Key Drivers

The main driver behind the current market action continues to come primarily from the US side, particularly the latest FOMC Minutes, which revealed that most Fed officials consider another rate hike within this year to be appropriate — a factor continuing to support further USD strength. In addition, the New York Fed Survey showed that 1-year inflation expectations rose to 3.9% from 3.6% previously, marking the highest level since 2023, further reinforcing the increasingly hawkish Fed outlook.

In the bond market, Treasury yields continue to climb sharply, with the 30-year yield touching 5.70%, its highest level in several years, creating pressure on risk assets and indirectly supporting the dollar as a safe-haven currency. Meanwhile, with no major economic data from Europe today, EUR/USD's price action is being driven mainly by the dollar side, compounded by weak technical signals. Additionally, Chinese markets have reopened after an extended holiday, which may have some impact on overall global risk sentiment, though this is not considered a major factor for this currency pair at present.

Technical Outlook

The technical picture for EUR/USD this morning is in an interesting zone, with RSI14 at 13.1, significantly below the standard oversold threshold of 30, reflecting intense and sustained selling pressure in recent sessions. Meanwhile, the current price at 1.1260 remains below SMA20 (1.1400) by roughly 140 pips and below SMA50 (1.1500) by roughly 240 pips, indicating that the medium-term downtrend still carries significant weight, consistent with the system's SELL signal.

Possible Scenarios Today

Upside Scenario (Technical Rebound): With RSI in severely oversold territory at 13.1, there is a possibility of a short-term technical bounce. If price can hold significantly above 1.1266, a test of the 1.1300 zone may be seen, but this would require clear buying pressure and supporting trading volume. Otherwise, it may just be a brief rebound before resuming the decline.

Downside Scenario (Continuation of Trend): If dollar strength driven by the hawkish Fed outlook and surging yields continues to pressure the market, EUR/USD could break below the 1.1259 support to test the 1.1240 zone or lower, especially in the absence of positive catalysts from the European side. This scenario would further reinforce that the medium-term downtrend remains intact.

What to Watch

• Today at 08:15 (US time): BOE Governor Bailey is scheduled to speak. While this is primarily GBP-related news, it could still affect broader European currency sentiment, including EUR.
• Tomorrow at 08:30: Canada's Employment Change and Unemployment Rate figures, which have a significant direct impact on USD/CAD.
• Risks to Watch: Continued surges in Treasury yields and volatility stemming from energy-related tensions in the Middle East, which could affect overall global risk sentiment. These should be monitored closely to inform decision-making.