The Euro (EUR) traded steadily due to a lack of new catalysts, with the CPI rising to 2.2% y/y, aligning with expectations. The exchange rate was last noted at 1.1752. Comments from ECB officials have eased expectations, with the indication that inflation risks are balanced and the ECB rate cut cycle may be nearing its end.
The daily chart shows mild bearish momentum fading, and RSI levels are stable. Trades are likely to continue within the recent range, with immediate resistance at 1.1810 and 1.1920 and support at 1.1640/70, 1.16, and 1.1460. French PM Sebastien Lecornu has ruled out a wealth tax and aims to reduce the budget deficit to 4.7% of GDP by early October 2026.
While early polls show a 16% positive opinion of him, the outlook remains uncertain. The Netherlands will hold General Elections on October 29, potentially affecting the euro in the short term. Nevertheless, overall fundamentals support the euro, suggesting a strategy to purchase on market dips.
As we look at the market on October 2nd, 2025, the Euro is trading quietly around 1.1750 against the dollar. The recent Eurozone inflation figure of 2.2% was exactly what was expected, so it didn’t cause any market waves. This stability is a significant change from the aggressive rate-hiking environment we saw back in 2023.
Our belief is that the European Central Bank’s cycle of rate cuts is likely over, with their main interest rate holding steady at 3.00% last month. This provides a solid floor for the Euro, as it suggests the currency’s yield will not be falling further relative to others. This fundamental backdrop supports a buy-on-dips approach for the Euro in the coming weeks.
However, there are short-term political risks that could push the currency down. Recent polls show the new French Prime Minister has only 16% public support, creating uncertainty around his ability to pass the 2026 budget. Furthermore, the upcoming Dutch general election on October 29th looks too close to call, which could lead to market jitters.
Given this conflict between a solid fundamental outlook and short-term political risk, we expect the Euro to remain in a range. For derivative traders, this makes selling options a viable strategy. Consider selling cash-secured put options with a strike price near the key support level of 1.1640 to collect premium.
The Dutch election is a specific event that could cause a sharp, unexpected price move in late October. To prepare for this, traders could buy short-dated straddles centered around the October 29th election date. This strategy would profit from a significant price swing in either direction following the results.
We should view any politically driven dips towards the 1.1600 to 1.1640 support zone as opportunities to enter bullish positions. If the Euro holds these levels and eventually breaks through the immediate resistance at 1.1810, the path would be clear for a move toward the 2025 high near 1.1920.
