On 1 October 2025, EUR/USD drifted lower toward 1.1725 in early European trading, pressured by a tenacious U.S. dollar. The dollar’s resilience is amplified by growing concerns over a U.S. government funding impasse, which began at midnight as Congress failed to pass a continuing resolution.

While the euro faces headwinds, it is also grappling with cautious rhetoric from European Central Bank officials. ECB President Christine Lagarde recently noted that inflation risks in the euro area remain “quite contained,” signaling that the bank is not rushing into aggressive easing.

In addition, sentiment data from the eurozone showed a modest uptick in consumer confidence for September, with a flash estimate of –14.9, up from –15.5 in August. However, these gains are still weak in absolute terms and may offer only limited support given the external pressures.

Technical Outlook: Key Levels in Focus

EUR/USD remains vulnerable unless bulls regain control. On the upside, resistance is stacked around 1.1750–1.1765, with a tougher barrier at 1.1800. Should the pair break through those levels convincingly, we could see a test of September highs.

To the downside, immediate support lies near 1.1700. A breach below that could open the path toward 1.1650, and potentially revisit the lows seen earlier in September. Technical indicators are modestly bearish, momentum is weak but not collapsed, pointing toward further range-bound pressure until a catalyst emerges.

Eurozone Confidence Slightly Improves, But Pressure Persists

The slight rebound in consumer confidence in September may offer a lifeline for the euro. According to the European Commission’s business and consumer surveys, eurozone sentiment ticked up modestly in September, with the overall Economic Sentiment Indicator (ESI) rising by 0.2 points.

Yet, this improvement must contend with trade tensions, political uncertainty, and the stronger dollar. Moreover, industrial and services sentiment in some member states continues to lag, limiting the upside for eurozone growth expectations.

ECB officials’ comments, especially from Lagarde emphasizing contained inflation risks, suggest the bank is not yet ready to commit to aggressive policy moves—another factor that may dampen euro momentum.

Outlook for EUR/USD

EUR/USD remains under pressure below 1.1750, with downside risk dominating the narrative for now. The modest improvement in eurozone consumer confidence could offer interim relief, but without stronger macro or policy drivers, the euro may drift lower.

Traders will watch developments in the U.S. closely, especially the impact of the government shutdown on data releases, along with any shifts in Fed expectations. If the shutdown delays employment or inflation data, the uncertainty could further bolster the dollar’s safe-haven status and weigh on the euro pair.