EURUSD on the brink of a new move: investors weigh the Fed against the AI stock crisis

The USD is losing support after strengthening, allowing the EURUSD pair to form an upward wave. The rate currently stands at 1.1225. Find out more in our analysis for 16 October 2026.

EURUSD forecast: key takeaways

• Investors are concerned about France's high government debt
• US inflation has fuelled expectations of restrictive Fed policy
• EURUSD forecast for 16 October 2026: 1.1285

Fundamental analysis

The EURUSD forecast takes into account that the dollar is losing support after five weeks of gains. The US currency is weakening amid a decline in AI-related technology stocks and falling US Treasury yields. The pair is forming a correction and testing the 1.1225 level.

Investors are concerned about France's high government debt and political uncertainty ahead of the 2027 elections. Rising government borrowing costs could dampen demand for European assets.

US inflation has fuelled expectations of a hawkish Federal Reserve stance. September CPI accelerated to 3.7% year-on-year, while core inflation reached 2.6%. These figures increase the likelihood of interest rates remaining high and create a risk of renewed dollar strength if investors believe the Fed will need to tighten monetary policy further.

Doubts about the profitability of investment in AI infrastructure have triggered a sell-off in technology stocks and increased demand for US Treasuries. Should this trend persist, falling US bond yields could temporarily weaken the dollar and support the EUR.

Today's EURUSD forecast considers that declining US yields and a weaker dollar are providing support for the single currency, but high US inflation and France's fiscal problems continue to pose risks. The pair's future direction will depend on which factor has the greater impact on markets: expectations of restrictive Federal Reserve policy or continued capital outflows from US technology assets.

Technical outlook

On the EURUSD H4 chart, the price has formed a Hammer reversal pattern near the lower Bollinger Band and may continue its upward wave as the signal plays out, with the upside target at the 1.1285 resistance level. A breakout above this mark would open the way for an uptrend.

However, today's EURUSD forecast also considers an alternative scenario. Quotes could continue to fall and test support around 1.1185 without testing the resistance level.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: downward
• Key resistance levels: 1.1285 and 1.1365
• Key support levels: 1.1185 and 1.1110

EURUSD trading scenario for today

Trading scenario (Buy Stop)

A breakout and consolidation above the 1.1285 resistance level would indicate increased buying pressure and create conditions for opening long positions.

• Current price: 1.1225
• Entry level: 1.1285
• Stop loss: 1.1250
• Take profit: 1.1365
• Risk-to-reward ratio: more than 1:3

The trade idea is valid until 11:00 PM on 16 October 2026 (server time, UTC+3).

Risk factors

The main risks to the bearish EURUSD scenario are a potential decline in US Treasury yields, an easing of the Federal Reserve’s monetary policy, and growing expectations of ECB interest rate hikes.

Summary

Falling US yields and a weaker dollar are providing support for the single currency, but high US inflation and France's fiscal problems continue to pose risks. EURUSD technical analysis suggests a rise towards 1.1285 following a correction.

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