EUR/USD 1.1200: Euro Near Lowest Level Since May 2025

EUR/USD 1.1200 was the level in focus on Monday, with the euro trading nearly unchanged and close to its lowest level since May 2025. French debt worries weigh on the euro, while a hawkish Federal Reserve and Middle East tensions support the dollar.

Key Takeaways

Flat on the day: EUR/USD barely moved in the early European session and stays near its weakest level in more than a year.
Fed bets shifting: Investors have trimmed expectations for an October rate hike, but bets on a 25-basis-point increase in December remain.
Eurozone risk: Concerns that France's debt crisis could spread to other heavily indebted Eurozone nations keep the euro on the back foot.

What Happened

EUR/USD struggled to find traction on Monday, according to FXStreet. Spot prices have moved sideways since the start of October, after about a month of declines.

Geopolitics added to dollar demand. Iran's top security official judged Washington's reply to Tehran's plan for reopening the Strait of Hormuz inadequate. The unresolved standoff keeps a risk premium in the market and supports the dollar as a safe haven.

Over the weekend, Yemen's Houthi group, which Iran backs, fired ballistic and cruise missiles and drones at King Khalid International Airport in Riyadh. The attacks were deadly, and Saudi Arabia vowed to retaliate. U.S. President Donald Trump said Washington could join strikes on the Houthis and resume attacks on Iran.

Background

The slide in EUR/USD began from a swing high in August. The sideways trading of recent weeks sits on top of that decline, and FXStreet describes it as a bearish consolidation phase.

On the 4-hour chart, EUR/USD trades well below the 100-period Simple Moving Average (SMA). That leaves the near-term technical bias negative, according to the analysis.

Market Impact

EUR/USD: Initial resistance sits at 1.1275, the top of the recent range, followed by the 100-period SMA near 1.1324. FXStreet treats a move below the 1.1160 year-to-date low as a fresh bearish trigger. The daily reference rate was 1.1217 (reference rate, 2026-10-12).
USD/JPY: Trading holds above 158.00 amid speculation that Japanese authorities will step in to support the yen. Softer U.S. bond yields limit the dollar's gains, and a holiday in Japan and the U.S. thinned liquidity.
Gold: Bullion slipped to a daily low around $4,170 in early European trading. The Fed's hawkish outlook weighs on the non-yielding metal as the dollar draws buyers.

What to Watch Next

U.S. CPI on Wednesday: The consumer price report is the first big inflation reading of the week and bears on Fed rate expectations.
U.S. PPI on Thursday: Producer prices follow a day later and add to the inflation picture ahead of the Fed's next move.
Warsh address on Friday: Fed Chair Kevin Warsh is scheduled to speak at the yearly IMF and World Bank gathering, where traders will look for cues on policy.

Bottom Line

EUR/USD is stuck in a narrow range just above its year-to-date low. The euro carries French debt concerns, while the dollar benefits from Fed and geopolitical factors. U.S. inflation data and Warsh's remarks are the scheduled events that could change Fed rate expectations this week.

EUR/USD at 1.1200: Euro Near Lowest Since May 2025