Dollar Pauses After Five-Week Run: Euro Bounces Hard Off 1.11
The dollar’s autumn rampage just hit its first real speed bump.
After five straight weeks of gains that carried EUR/USD from 1.15 to the edge of 1.11, the greenback stalled on Monday — and the euro pounced. The pair dipped to 1.1114 in early trade, its lowest since early 2025, before buyers stormed back and drove it to 1.1204 by the close. A 90-pip intraday reversal of that size, after a 400-pip decline, is the market’s first honest vote that the move has gone far enough for now.
Why here, why now
Three things converged. First, positioning: speculative euro shorts reached their most extreme reading of the year last week — the fuel for a squeeze was stacked to the ceiling. Second, the calendar: US CPI lands Thursday, and nobody wants maximum dollar exposure into the one number that could break the trend. Third, valuation: at 1.11, the euro is cheaper than at any point since 2022 on purchasing-power metrics, and some real-money accounts are finally acting on it.
Sterling joined the bounce, recovering from a test of 1.3139 to close at 1.3257. The pound’s ability to hold 1.32 for a fourth time this year is quietly one of the most impressive technical stories in the majors.
What would confirm the turn
A close above 1.1240 this week breaks the sequence of lower highs and opens 1.1320. Failure at 1.1240, and the path back to 1.1114 — and likely through it — reopens. Thursday’s CPI is the referee. Until then, this is a trader’s market: respect the bounce, don’t marry it.
Disclaimer: This is market commentary, not investment advice. Trading FX, commodities, equities and crypto carries substantial risk of loss.
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