Euro ends the week at risk of further decline
On Friday, October 23, 2026, the euro's dynamics on FOREX will depend on a combination of macroeconomic signals from the US and Eurozone countries, as well as geopolitical risks in the Middle East. The threat of renewed military confrontation between the US and Iran could strengthen demand for the dollar as a safe-haven asset and put additional pressure on the European currency.
For the euro, it is now especially important which factor turns out to be stronger: the monetary policy outlook of the US Federal Reserve and the European Central Bank, or investor concerns about further escalation of the conflict.
US and Eurozone statistics: what has changed in the market
One of the most notable European indicators published on October 22 was the decline in consumer confidence in the Eurozone. According to a preliminary European Commission estimate, the index fell to −17.9 points against −16.8 in September, while analysts had expected −17.0. A sharper-than-forecast deterioration in sentiment points to persistent problems in the European economy.
Additional pressure on the euro comes from expensive energy and concerns about France's public finances. The yield on French ten-year bonds rose to around 5.1% — the highest since 2002. Against this backdrop, the EUR/USD pair fell below 1.1200 during Thursday's trading after a failed attempt to consolidate above 1.1250.
In the US, investor attention was focused on financial market dynamics and expectations regarding future Fed policy. On Thursday, the technology sector came under pressure: the Nasdaq lost 2.6%, and US Treasury yields declined. This reflected investor caution and a reassessment of market outlook expectations. At the same time, the decline in US bond yields limited dollar support.
On Friday, October 23, preliminary October PMI business activity indices for the US and Eurozone will serve as additional guidance for the currency market. These data will help assess the state of manufacturing and services on both sides of the Atlantic.
Threat of a new US-Iran war
A key uncertainty factor remains the Middle East. On October 22, there were reports of attacks on ships near the Strait of Hormuz, and Iranian officials warned of possible retaliatory strikes on American and Israeli targets if military operations resume. At the same time, diplomatic contacts continue, although the prospects for reaching an agreement remain unclear.
For the currency market, this situation creates mixed signals. On the one hand, an escalation of the conflict traditionally increases demand for the dollar as a safe-haven asset. On the other hand, a possible spike in oil prices could fuel inflation in the US and affect expectations regarding Fed interest rates. For the Eurozone, expensive oil is especially unwelcome due to the region's dependence on energy imports.
What to expect from the euro going forward
In the near term, the euro remains vulnerable to a combination of weak European data, high energy costs, and geopolitical risks. If the preliminary Eurozone PMIs disappoint investors and US statistics come in stronger than expected, the EUR/USD pair could face a new wave of selling.
At the same time, falling US bond yields and signs of weakening business activity in the US could limit the dollar's strengthening.
The main reference levels for EUR/USD: the 1.1200 zone as an important short-term level, resistance near 1.1250, and support around 1.1150. These marks reflect recent trading dynamics, not guaranteed target moves.
