Euro Slides to 17-Month Lows: Why EUR/USD Is Struggling Near 1.11

The euro has had a rough couple of weeks. EUR/USD dropped below the psychological 1.12 level on Monday and traded around 1.1155, its weakest reading since May 2025. A modest bounce followed on Tuesday, but the broader picture still looks tilted against the single currency. Here is what is behind the slide and where traders are looking next.

A Sharp Drop in Just Two Weeks

The speed of the move is striking. According to the Federal Reserve’s H.10 release, the euro was worth about $1.1367 on September 28. By October 1 it had dropped to $1.1232, and it was still only back to $1.1259 on October 2. That is a loss of more than a cent in a matter of days, which is a big move for a major pair.

It Is Not Only a Dollar Story

Here is the detail that makes this episode more interesting than a standard dollar rally. The euro has also been falling against the Swiss franc and the British pound. When a currency weakens against several others at the same time, the cause is usually something specific to that currency, not just broad dollar strength.

Analysts point to a growing risk premium on the euro tied to French fiscal worries. France’s budget troubles have been a running theme, and investors appear to be demanding extra compensation for holding euro assets while the situation is unresolved. Energy plays a role too: Europe imports a lot of its energy, so surging oil prices after the latest Houthi attacks on Saudi Arabia hit eurozone economies harder than the US.

The Dollar Side of the Equation

Meanwhile, the US dollar has strong support. Fed officials have been repeating the case for further rate hikes, and markets expect another one by December. Even a softer US jobs report earlier this month only pushed the expected timing back rather than removing the hike from the picture. A wider interest-rate advantage for the dollar naturally weighs on EUR/USD.

The Tuesday Bounce

On Tuesday the dollar eased slightly as oil prices slipped and US bond yields steadied, giving the euro some breathing room. Analysts caution against reading too much into it. Longer-term momentum remains clearly bearish, and a rebound like this is being treated as a counter-trend move until proven otherwise.

Levels Traders Are Watching

• 1.1184: where one analyst expects the current corrective wave could run out of steam
• 1.1124 and 1.1100: the next downside targets, with the 1.11 handle a widely watched round number
• 1.12: the psychological level the pair needs to reclaim to show buyers are returning
• Further down: some outlooks mention the 1.10 handle if the dollar rally continues without relief

What Could Change the Picture

Today’s US inflation report is the next big test. A cooler core reading could take some pressure off the dollar and give the euro room to recover. A hot print would likely do the opposite. Beyond that, any clarity on French budget talks or a calming of the oil market would help the euro’s cause.

The Takeaway

EUR/USD at 17-month lows reflects a mix of dollar strength, French fiscal anxiety and energy costs, and none of those problems has an obvious quick fix. Unless one of them eases, rallies in the pair are more likely to be treated as chances to sell than as the start of a turnaround. Keep position sizes sensible around today’s CPI release.

This article is for informational purposes only and does not constitute financial or investment advice. Forex trading involves substantial risk of loss.