EUR/USD Overview – October 15: Why Is the Dollar Rising?

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The EUR/USD currency pair moved—once again—downward throughout Tuesday. At this point, it seems we could write the same story every day: the dollar strengthened yet again, with seemingly no apparent reason. Of course, with enough effort, a reason can always be found. Tuesday provided a weaker-than-expected ZEW economic sentiment index for both Germany and the Eurozone. But here's the problem: why does the market treat all negative euro news seriously, while consistently ignoring negative dollar news?

Let's recall: the U.S. government shutdown continues, the labor market is deteriorating, the Federal Reserve is more dovish than the European Central Bank, and President Trump escalated the trade war with China again last Friday. Aren't these factors enough to push the dollar down by at least 100 pips? For now, the market continues to ignore nearly all bearish data for the dollar. And this brings us back to our headline: not "Why is the dollar rising?" but "What is the dollar rising for?"

Recent developments in the cryptocurrency market provide a useful comparison. If Bitcoin and Ethereum fell only moderately, some altcoins dropped by as much as 100% in just 10 minutes. Now ask yourself: What level of trust will traders have in 99% of altcoins if they know even a stop-loss order can't protect them? If they realize that prices can collapse to zero at any moment? These are instruments too far removed from real market behavior.

And to this day, we still haven't received a clear explanation for what happened last Friday evening. Analysts keep blaming Trump's new tariffs on China as the cause for the crypto sell-off. But Trump introduces new tariffs nearly every week. These same analysts show no concern for the fact that Bitcoin performed well for the past 4–5 months in the midst of that same trade war. And the dollar? It shows no reaction at all—to the shutdown, to the renewed trade tensions. But as long as there's a "formal" reason for a move, no one questions deeper logic.

We believe the same kind of dynamic is currently unfolding with the U.S. dollar. It may not be outright manipulation by market makers, but the dollar's strength is certainly illogical. What message are large players sending to retail traders? That the dollar will continue to appreciate, and that the worst is behind it. The dollar is still the world's reserve currency. And when EUR/USD and GBP/USD fall far enough, a new strong rally will start at the most unexpected moment—because large players will have already built massive long positions.

We also note that on the daily timeframe, both pairs remain in a flat range—meaning, further declines don't even need a reason. One of two things is happening: either this is a large-scale technical correction or manipulation. Or both at once. Either way, in our view, the outcome will be the same.

The average EUR/USD volatility over the last five trading days is 75 pips, which is classified as "average." On Wednesday, we expect the pair to move within the range of 1.1520 to 1.1670. The higher linear regression channel is still pointed upward, indicating a longer-term uptrend. The CCI indicator has entered oversold territory, which could lead to the start of a new bullish phase.

Nearest support levels:

S1 – 1.1536

S2 – 1.1414

S3 – 1.1353

Nearest resistance levels:

R1 – 1.1597

R2 – 1.1658

R3 – 1.1719

Trading Recommendations:

EUR/USD continues a corrective phase, but the long-term uptrend remains intact, as seen on all higher timeframes. The U.S. dollar remains under pressure from Donald Trump's policies, which show no sign of slowing down. While the dollar has risen recently, the fundamental drivers behind this are questionable. The flat range on the daily chart explains much of the market's behavior.

If price remains below the moving average, short positions may be considered with targets at 1.1536 and 1.1520 based purely on technical factors. If the pair breaks above the moving average, long positions remain relevant with targets at 1.1841 and 1.1902, continuing the trend.

Illustration Key:

• Linear regression channels help outline the current trend. If both channels point in the same direction, the trend is strong.
• The smoothed moving average (20.0) determines the short-term direction and recommended bias.
• Murrey levels serve as reference points for movement targets and corrective phases.
• Volatility levels (red lines) estimate the projected daily price range based on current volatility metrics.
• The CCI indicator signals a potential reversal when entering oversold (below –250) or overbought (above +250) zones.

The material has been provided by InstaForex Company - www.instaforex.com