Euro Below 1.12 for the First Time in Months: What to Watch This Week
1.1157.
That’s where EUR/USD closed on Friday — the lowest finish since early 2025 — and it opens this week in genuinely uncharted territory for anyone who started trading after 2022. The pair has now fallen roughly 4.9% from its mid-May high of 1.1743, and the decline is accelerating, not slowing.
How we got here
The European Central Bank’s reference rates tell the story cleanly. A euro bought 1.1505 dollars in September on average, 1.1594 in August, 1.1423 in July. The trajectory has been down for months, and October is starting with the euro weaker still. Against the yen, a single euro now buys 177.33 — the yen having recovered dramatically from its September panic low.
The drivers haven’t changed: US resilience versus European stagnation, rate paths diverging in the dollar’s favor, and positioning that keeps rewarding the trend-following crowd. Until one of those pillars breaks, guessing the bottom is a losing hobby.
The dollar’s only soft spot
Worth noting: the dollar isn’t uniformly strong. USD/JPY is trading around 158.6, well off its July peak of 164, and the Bank of Japan’s rate posture remains the one developed-market wildcard that could still upset the dollar applecart. If you want a long-dollar expression with less intervention risk than USD/JPY, the euro has been the cleaner vehicle all quarter.
Sterling, meanwhile, is testing the bottom of its recent range at 1.3200. That level has held three times since June. A fourth test this week, with dollar momentum this strong, is a test I’d expect to fail.
The week ahead
Watch the 1.1100 handle on EUR/USD — a break below opens the 2025 lows near 1.0900. Any recovery needs to reclaim 1.1300 just to signal stabilization. As for data, the calendar is heavy midweek, and in this environment, even second-tier US releases are moving markets because positioning is so one-sided.
The trend is your friend until it isn’t. Right now, it’s very much your friend if you’re long dollars. Just remember that friends like this leave without saying goodbye.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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