Stop The Fall, Dollar Bulls Have Returned is the weekly forecast for EUR/USD.

The EUR/USD pair sustained its gain during the first part of the week, but failed catastrophically at parity, closing the week at approximately 0.9750 and incurring a little weekly loss.

At the beginning of the fourth quarter, optimism reigned supreme, as Wall Street reported big profits and government bonds extended their gains from the previous week.

The EUR/USD is supported by an appetite for risk.

The increasing possibility of a global recession, according to market participants, would prompt central banks to reduce the rate of quantitative easing sooner rather than later.

The Reserve Bank of Australia hiked the cash rate by 25 basis points, which was less than anticipated, fueling speculation and demand for high-yielding assets.

But the positive feelings did not stay long. The value of the common currency began to decline on Wednesday when the EU suggested more penalties on Russia for its invasion of Ukraine in February.

Following the illegal annexation of Donetsk, Luhansk, Kherson, and Zaporizhzhia, sanctions were implemented, including a price ceiling on Russian oil and restrictions on imports and exports from and to the nation.

The European Union is presently in peril.

Moreover, slow EU statistics reignited fears of a Union economic downturn, lowering the risk-taking disposition. The revised September PMIs from S&P Global indicate a worse decrease in the business sector.

Simultaneously, wholesale inflation in the EU increased by 43.3% year-over-year in August, while retail sales in the same month fell by 0.3% and German sales fell by 1.0%.

The European Central Bank Meeting on Monetary Policy Accounts had an effect on the common currency as well. According to the memo, some officials wanted a 50 basis point rate increase.

Moreover, the median inflation forecast for the next three years remained at 3%. Policymakers underlined that the weakening of the euro could exacerbate inflationary pressures, but that responding "decisively" now would eliminate the need for more dramatic rate hikes in the future.

Officials of the US Federal Reserve are more hawkish than ever before.

The market sentiment deteriorated further as US Federal Reserve speakers echoed their well-known hawkish tone.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, remarked that there is more work to be done on inflation, and that while there is a risk of overshooting, there is little sign that inflation has reached its peak.

Charles L. Evans, president of the Federal Reserve Bank of Chicago, and Loretta Mester, president of the Federal Reserve Bank of Cleveland, both declared that inflation is their primary concern.

Governor Christopher Waller concluded by stating that he sees no reason to slow down the Fed's policy tightening. In the meantime, data from the United States has bolstered hopes that the Federal Reserve will continue its aggressive monetary tightening.

According to September Nonfarm Payrolls data, the US added 265K new jobs in September, which was more than anticipated but less than the previous month.

The unemployment rate decreased unexpectedly to 3.5%, but labor force participation decreased less than anticipated to 62.3% from 62.3% in August. The revelation came after a spate of disappointing U.S. job statistics.

On Tuesday, market participants learned that the number of job openings dropped considerably in August, while the number of layoffs and discharges remained above 1.5 million.

Moreover, according to the Challenger Job Cuts report released on Thursday, US-based companies reported 29,989 layoffs in September, an increase of 46.4% from August and 67.8% from a year ago.

Finally, initial unemployment claims for the week ending September 30 unexpectedly increased to 219K, exceeding expectations of 200K. Despite contradictory evidence, the employment market remains sturdy enough to survive rate increases. Everything boils down to inflation.

There will be fewer but more intriguing events throughout the following week. The US Federal Reserve will release the Minutes of its most recent meeting on Wednesday, and the government will release the September Consumer Price Index on Thursday.

Inflation is anticipated to increase by 8.1% this year, a little increase from the 8.3% recorded in 2017. The anticipated core reading is 6.5%. If the CPI decreased in August, it would likely have little impact on what the market expects the Federal Reserve to do.

Germany will release the Harmonized Consumer Price Index for September, which is anticipated to remain unchanged at 10.9%. Friday will focus on September Retail Sales in the United States.