The euro rises for a second day after a prolonged decline
The euro has started to recover on the FOREX currency market after a prolonged decline against the US dollar. On Wednesday, October 14, the European currency is rising for the second consecutive day, regaining part of its recent losses. However, for now it is more likely a correction of the downward movement rather than a full trend reversal.
On Monday, October 12, the EUR/USD pair dropped to around 1.1150 dollars per euro—the lowest level since May 2025. Already on Tuesday, quotes recovered to the 1.1190–1.1200 area. Pressure on the dollar increased after the American currency began to retreat from its previously reached 18-month high.
Why did the euro begin to rise?
The first reason is the weakening of the dollar. Investors began to take profits after the strong appreciation of the American currency. Additionally, market participants are reassessing the prospects of American technology companies and the sustainability of capital inflows into US assets.
The second reason is the expectation of new US inflation data. Traders are taking a more cautious stance ahead of the release of consumer price statistics and speeches by Federal Reserve representatives. These events could affect interest rate forecasts. If the data turn out softer than expected, pressure on the dollar could increase, supporting EUR/USD. At the same time, high inflation could return the advantage to the American currency.
The third reason is a technical correction. After a substantial fall, the euro hit multi-month lows, so some market participants began to close short positions and buy back the cheaper currency. Such movements often occur even within a persistent downward trend.
What to expect from the euro going forward?
Despite the recovery of the last two days, the fundamental picture remains difficult for the European currency. Investors are still concerned about France's budget problems and tensions in the European government bond market. An additional advantage for the dollar remains the higher yield of American assets and the hawkish rhetoric of the Fed.
In the coming days, the direction of EUR/USD will largely depend on American inflation statistics and Fed signals. Weaker data could prolong the euro's recovery, while accelerating inflation could renew demand for the dollar.
Thus, the current rise of the euro looks primarily like an attempt to compensate for previous losses. To confirm a sustainable reversal, the market will need more significant signals that the dollar's advantage is beginning to diminish.