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EUR/USD's next move hinges on central bank policy

EUR/USD faces a key support test as markets await the Fed and ECB. Guidance on future rate rises could determine whether the pair extends its decline or rebounds towards $1.12.

Michael J Kramer

Founder, Mott Capital Management

28 Oct 2026, 14:13

EUR/USD has been falling and appears to have broken through support ahead of the Federal Reserve (Fed) and European Central Bank (ECB) interest rate announcements. Neither central bank is expected to raise rates at its October meeting. However, the Fed is expected to raise rates at its next meeting in December, while the market is less certain about the ECB. How the two central banks signal future rate increases, and how far they may need to go, could matter most.

For now, expectations have pushed EUR/USD lower, leaving it in an unfavourable position that could lead to further declines. A fall through support at $1.115 sets up a key test around $1.105. A break below that level could send EUR/USD lower still, potentially towards the next major support area around $1.07.

EUR/USD daily chart

Source: TradingView, 28 October 2026

Whether EUR/USD breaks support at $1.105 may depend on the tone the two central banks take on future rate rises. With markets expecting as many as three more rate rises from the ECB through to the end of 2027, and as many as three from the Fed, whichever central bank sounds the most hawkish or dovish relative to expectations is likely to break the stalemate. This could determine whether EUR/USD falls through support and continues lower, or bounces and challenges resistance at $1.12.

The Week Ahead: US rate decision, PCE inflation, Microsoft earnings

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