The euro/dollar pair remained stable during the European session on Wednesday (October 28). Following strong US consumer confidence and housing data released on Tuesday, the euro weakened against the dollar, approaching a key support level. The pair fell to 1.1125, its lowest intraday level since October 14, and retreated 5% from its September high. The market will now focus on the upcoming interest rate decisions from the Federal Reserve and the European Central Bank. The euro/dollar remains near its yearly lows, primarily due to the strong dollar and the unresolved French budget crisis. Energy prices are at record highs, with further gains possible given the potential for a US and Israeli attack on Iran following the US midterm elections this week. In the Eurozone, economic activity remains robust, and Friday's Q3 2026 GDP data should provide positive signals. However, yesterday's ECB bank lending survey showed stricter lending conditions and an unexpected decline in corporate loan demand. The Fed's interest rate decision is also anticipated. The euro weakened against the dollar, driven by positive US economic data. Data from the Conference Board showed that the consumer confidence index rose to 91.7 in October, higher than the market expectation of 81.2 and also higher than the previous month's 84.2. Consumer spending is a core component of the US economy, making higher consumer confidence an important signal. Analysts had expected the index to decline due to the sharp rise in gasoline and diesel prices this year. Another data point showed that US new home sales reached 676,000 units, far exceeding the market expectation of 651,000 units. The Federal Reserve will announce its interest rate decision the day after the release of the aforementioned key data. Economists expect the Fed to maintain the interest rate range at 3.75%-4%, and policymakers will assess the impact of the previous rate hike on inflation. After the decision, the exchange rate will also be affected by the preliminary US Q3 GDP figure and the September Personal Consumption Expenditures (PCE) price report. Another major driver for the euro against the dollar is the European Central Bank's (ECB) policy meeting on Thursday. Economists expect the ECB to also maintain its interest rate and assess the subsequent impact of the September rate hike. Technical Analysis (EUR/USD Daily Chart Source: FX678) The daily chart shows that the euro has been under pressure against the dollar in recent months, currently fluctuating around the key support level of 1.1111, the low reached on October 14th. The exchange rate has closed lower for five consecutive trading days. It has broken below the 50-day moving average and the Supertrend indicator, technical signals indicating that bears are currently in control, and the Relative Strength Index (RSI) is also continuing to decline. Therefore, the exchange rate is likely to continue its downward trend, targeting the key support level of 1.1050. A break below this key support level of 1.1110 would further confirm this bearish view. Bearish View: Short EUR/USD, take profit at 1.1050; stop loss at 1.1200. Bullish View: Long EUR/USD, take profit at 1.1200; stop loss at 1.1050.