EUR/USD Price Forecast: A challenge of the 200-day SMA in the offing?
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UPGRADE- EUR/USD seems to have met some contention around 1.1470 for now.
- The US Dollar clinched fresh multi-month highs amid higher yields.
- The US ISM Services PMI and ADP report surprised to the upside in October.
EUR/USD extended its losing streak on Wednesday, slipping back toward the 1.1470 area, its lowest level since August, as the pair’s recent bearish run shows little sign of stopping.
The slide comes as the US Dollar (USD) continues to power ahead. The US Dollar Index (DXY) climbed further, testing its 200-day simple moving average (SMA) near 100.40, helped by a solid uptick in US Treasury yields across several maturities.
Washington deadlock starts to bite
The government shutdown has now dragged into its 36th day, the longest in US history, and there’s still no end in sight.
In Washington, the blame game continues. Both parties are pointing fingers, but neither is taking visible steps to reopen the government. The Senate has already tried, and failed, 14 times to pass a House-approved stopgap funding bill, while the House itself hasn’t been in session since the shutdown began.
Meanwhile, ordinary Americans are feeling the pain. Over a million federal employees are still working without pay, and around 600,000 more are furloughed at home. On this, a 2019 law promises back pay once the shutdown ends, but recent comments from President Trump have left some workers anxious about whether that guarantee will hold.
Furthermore, the fallout is spreading beyond Washington. Airports are short-staffed, national parks have closed, and critical government services are starting to pile up delays. The longer it drags on, the greater the damage, not just to household finances, but to confidence in Washington’s ability to keep the country running.
Trade tensions cool remains on the back burner for now
After weeks of friction, Presidents Donald Trump and Xi Jinping met in South Korea last week, offering markets a small sigh of relief: another pause in the US–China trade war.
Following nearly two hours of talks, Trump said the US would roll back some tariffs, while China agreed to resume soybean imports, keep rare earth exports flowing, and step up cooperation on fentanyl trafficking. Beijing later confirmed that both sides had agreed to extend their trade truce for another year, a modest but welcome sign of stability following earlier negotiations in Malaysia.
The story of a cautious Fed
The Federal Reserve (Fed) took a measured approach at its October 29 meeting, cutting rates by 25 basis points and announcing a modest resumption of Treasury purchases to ease funding pressures in money markets.
The decision, a 10–2 vote, lowered the target range to 3.75%–4.00%, a move widely expected by markets. Officials described the cut as a precaution against a cooling labour market rather than the start of a fresh easing cycle.
In his press conference, Fed Chair Jerome Powell acknowledged growing divisions within the Federal Open Market Committee (FOMC) and warned investors not to assume another rate cut in December.
Markets are now pencilling in around 16 basis points of additional easing by year-end, and about 77 basis points by the end of 2026.
ECB stays in wait-and-see mode
Across the Atlantic, the European Central Bank (ECB) kept rates unchanged at 2.00% for a third straight meeting last week, offering little in the way of new guidance. For now, officials appear content with steady growth and inflation hovering close to target, a rare luxury among major central banks.
After cutting rates by two percentage points earlier in the year, the ECB has shifted to a holding pattern. President Christine Lagarde noted that some global risks have eased after the latest trade developments and Washington’s partial tariff rollback, but cautioned that uncertainty remains high.
With implied rates pointing to just over 8 basis points of easing by end of 2026, investors seem convinced the ECB’s rate-cutting cycle is largely over, at least for now.
Tech corner
The pronounced correction drags EUR/USD closer to the oversold territory, reigniting hopes of a potential technical rebound in the short-term horizon. However, sentiment remains sour for now.
Further south emerges the November base at 1.1468 (November 5), prior to the August floor at 1.1391 (August 1), and the key 200-day SMA at 1.1332. Next on the downside comes the weekly trough at 1.1210 (May 29), ahead of the May valley at 1.1064 (May 12).
In contrast, the 100-day and 5-day SMAs at 1.1663 and 1.1669, respectively, offer interim resistance, seconded by the weekly high at 1.1728 (October 17) and the October top at 1.1778 (October 1). Further up sits the 2025 ceiling of 1.1918 (September 17) before the 1.2000 yardstick.
In the meantime, momentum indicators keep pointing toward the bearish side: the Relative Strength Index (RSI) hovers around the 32 level, while the Average Directional Index (ADX) near 20 indicates a trend that continues to pick up pace.
EUR/USD daily chart
What’s next
For now, EUR/USD remains stuck in familiar territory, waiting for a catalyst strong enough to break it out of its range. A softer Fed stance, better global risk sentiment, or renewed appetite for Eurozone assets could offer some breathing space, but until then, the Dollar’s dynamics keep calling the shots.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- EUR/USD seems to have met some contention around 1.1470 for now.
- The US Dollar clinched fresh multi-month highs amid higher yields.
- The US ISM Services PMI and ADP report surprised to the upside in October.
EUR/USD extended its losing streak on Wednesday, slipping back toward the 1.1470 area, its lowest level since August, as the pair’s recent bearish run shows little sign of stopping.
The slide comes as the US Dollar (USD) continues to power ahead. The US Dollar Index (DXY) climbed further, testing its 200-day simple moving average (SMA) near 100.40, helped by a solid uptick in US Treasury yields across several maturities.
Washington deadlock starts to bite
The government shutdown has now dragged into its 36th day, the longest in US history, and there’s still no end in sight.
In Washington, the blame game continues. Both parties are pointing fingers, but neither is taking visible steps to reopen the government. The Senate has already tried, and failed, 14 times to pass a House-approved stopgap funding bill, while the House itself hasn’t been in session since the shutdown began.
Meanwhile, ordinary Americans are feeling the pain. Over a million federal employees are still working without pay, and around 600,000 more are furloughed at home. On this, a 2019 law promises back pay once the shutdown ends, but recent comments from President Trump have left some workers anxious about whether that guarantee will hold.
Furthermore, the fallout is spreading beyond Washington. Airports are short-staffed, national parks have closed, and critical government services are starting to pile up delays. The longer it drags on, the greater the damage, not just to household finances, but to confidence in Washington’s ability to keep the country running.
Trade tensions cool remains on the back burner for now
After weeks of friction, Presidents Donald Trump and Xi Jinping met in South Korea last week, offering markets a small sigh of relief: another pause in the US–China trade war.
Following nearly two hours of talks, Trump said the US would roll back some tariffs, while China agreed to resume soybean imports, keep rare earth exports flowing, and step up cooperation on fentanyl trafficking. Beijing later confirmed that both sides had agreed to extend their trade truce for another year, a modest but welcome sign of stability following earlier negotiations in Malaysia.
The story of a cautious Fed
The Federal Reserve (Fed) took a measured approach at its October 29 meeting, cutting rates by 25 basis points and announcing a modest resumption of Treasury purchases to ease funding pressures in money markets.
The decision, a 10–2 vote, lowered the target range to 3.75%–4.00%, a move widely expected by markets. Officials described the cut as a precaution against a cooling labour market rather than the start of a fresh easing cycle.
In his press conference, Fed Chair Jerome Powell acknowledged growing divisions within the Federal Open Market Committee (FOMC) and warned investors not to assume another rate cut in December.
Markets are now pencilling in around 16 basis points of additional easing by year-end, and about 77 basis points by the end of 2026.
ECB stays in wait-and-see mode
Across the Atlantic, the European Central Bank (ECB) kept rates unchanged at 2.00% for a third straight meeting last week, offering little in the way of new guidance. For now, officials appear content with steady growth and inflation hovering close to target, a rare luxury among major central banks.
After cutting rates by two percentage points earlier in the year, the ECB has shifted to a holding pattern. President Christine Lagarde noted that some global risks have eased after the latest trade developments and Washington’s partial tariff rollback, but cautioned that uncertainty remains high.
With implied rates pointing to just over 8 basis points of easing by end of 2026, investors seem convinced the ECB’s rate-cutting cycle is largely over, at least for now.
Tech corner
The pronounced correction drags EUR/USD closer to the oversold territory, reigniting hopes of a potential technical rebound in the short-term horizon. However, sentiment remains sour for now.
Further south emerges the November base at 1.1468 (November 5), prior to the August floor at 1.1391 (August 1), and the key 200-day SMA at 1.1332. Next on the downside comes the weekly trough at 1.1210 (May 29), ahead of the May valley at 1.1064 (May 12).
In contrast, the 100-day and 5-day SMAs at 1.1663 and 1.1669, respectively, offer interim resistance, seconded by the weekly high at 1.1728 (October 17) and the October top at 1.1778 (October 1). Further up sits the 2025 ceiling of 1.1918 (September 17) before the 1.2000 yardstick.
In the meantime, momentum indicators keep pointing toward the bearish side: the Relative Strength Index (RSI) hovers around the 32 level, while the Average Directional Index (ADX) near 20 indicates a trend that continues to pick up pace.
EUR/USD daily chart
What’s next
For now, EUR/USD remains stuck in familiar territory, waiting for a catalyst strong enough to break it out of its range. A softer Fed stance, better global risk sentiment, or renewed appetite for Eurozone assets could offer some breathing space, but until then, the Dollar’s dynamics keep calling the shots.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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