EUR/USD Price Forecast: Decent contention emerges near 1.1500
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UPGRADE- EUR/USD alternates gains with losses in the low 1.1600s on Tuesday.
- The US Dollar manages to rebound from earlier multi-day lows.
- The Middle East crisis continues to dictate the sentiment globally.
Since the rejection from annual highs near the 1.2100 barrier in late January, the short-term outlook for EUR/USD has been deteriorating uninterruptedly. The recent break below the important 200-day SMA also opens up the possibility of further retracements in the near-term horizon.
EUR/USD fades part of the recent recovery, coming under some selling pressure soon after challenging its critical 200-day SMA near 1.1670 on turnaround Tuesday.
The pair’s inconclusive price action comes on the back of the equally vacillating mood in the Greenback, with the US Dollar Index (DXY) struggling to reclaim the 99.00 hurdle and beyond so far this week.
Meanwhile, tensions in the Middle East remain anything but abated, although the latest comments from President Trump seem to have shed a ray of hope on a sooner rather than later end to the crisis, marginally improving the sentiment around the risk complex.
Fed: comfortable, but keeping options open
The Federal Reserve (Fed) left the Fed Funds Target Range (FFTR) unchanged at 3.50% to 3.75% in January, fully in line with market expectations.
The shift was not in the decision itself, but in the tone. The Federal Open Market Committee (FOMC) sounded noticeably more comfortable with the broader economic backdrop. Growth continues to hold up, employment risks are no longer seen as deteriorating, and although inflation remains somewhat elevated, the sense of urgency has clearly faded.
The 10 to 2 vote split, with two members favouring a 25 basis point cut, is a reminder that the internal debate is still very much alive.
Chair Jerome Powell described policy as being in a “good place”, reiterating that decisions will continue to be taken meeting by meeting. On tariffs, he acknowledged that they remain a factor behind recent inflation noise while also highlighting ongoing services disinflation. A rate hike is not the base case, but neither is an imminent pivot.
The Minutes reinforced that balanced message. Rate cuts remain possible if inflation continues to cool, although hikes have not been ruled out should price pressures prove persistent. In short, the Fed remains firmly data dependent.
Markets now price roughly 48 basis points of easing by year-end, although policymakers are widely expected to keep rates unchanged again at the March 18 meeting.
ECB: patient stance, steady message
The European Central Bank (ECB) also kept interest rates unchanged in a unanimous decision.
President Christine Lagarde struck a calm but cautious tone in her latest remarks. Inflation is still expected to return to the 2% target over the medium term, although services prices remain under close scrutiny, and further easing is projected into 2026.
Lagarde also pointed to resilient wages, a still-solid labour market and steady investment dynamics across the bloc. At the same time, she reiterated that while the ECB closely monitors the Euro (EUR), it does not target the exchange rate.
Markets currently price around 24 basis points of tightening by year-end, while a hold at the March meeting is almost fully discounted.
For now, the ECB appears broadly comfortable with the current policy stance while continuing to emphasise its data-dependent approach.
Positioning: Euro longs cool down a little
According to the most recent statistics from the Commodity Futures Trading Commission (CFTC), speculative positioning in the Euro (EUR) has become a little less strong.
Non-commercial net long holdings fell to around 136.5K contracts in the week ending March 3. This was the lowest level in five weeks and suggests that some investors have begun to cut back on their bullish exposure following the recent rise.
At the same time, institutional investors cut their net short holdings to around 184.6K contracts, which is also a multi-week low. The move shows that both sides of the market are changing their positions, not that there is a definite change in direction.
However, participation was rather steady, as open interest went up a little to around 913.3K contracts, which shows that activity in the market is still going strong even if speculative longs have pulled back a little.
Overall, the statistics show that the Euro's long bias is still in place, but traders seem to be losing some of their confidence as they look at the bigger picture.
Washington is still in charge
Near term: the US dollar is still the key factor affecting the pair. This is because the markets are still dealing with trade uncertainties and ongoing geopolitical concerns. The most important US data release this week is the inflation numbers that come out on Wednesday. After that, there are the Personal Consumption Expenditures (PCE), the weekly labour market report, and the preliminary U-Mich gauge.
Risks: If the geopolitical situation doesn't get better, a higher Greenback might put extra pressure on risky assets. From a technical point of view, a sustained break below the 200-day Simple Moving Average (SMA) would make a deeper decline more likely.
Technical landscape
In the daily chart, EUR/USD trades at 1.1634. The near-term bias turns mildly bearish as spot slips below the 55- and 100-day Simple Moving Averages (SMAs), which now cap the topside near 1.1760–1.1697 while the rising 200-day SMA around 1.1676 lags above price but loses immediate influence. The Relative Strength Index (RSI) holds below 40, signalling persistent downside momentum after the recent break lower, and the Average Directional Index (ADX) edges back toward 30, indicating strengthening trend conditions in favour of sellers rather than a range phase.
Initial resistance emerges at 1.1766, reinforced by the nearby 55- and 100-day SMAs, and a daily close above this area would be needed to ease bearish pressure and open the way toward the 1.2082 barrier. On the downside, immediate support stands at 1.1578, with a decisive break exposing the lower support band at 1.1491, followed by 1.1469 and 1.1392, where sellers would be expected to slow ahead of any deeper extension.
(The technical analysis of this story was written with the help of an AI tool.)
Bottom line: the Dollar remains in the driving seat
For now, EUR/USD continues to be driven far more by developments in Washington than by events in Frankfurt.
Until the Fed’s policy path becomes clearer, or the euro area delivers a stronger cyclical upswing, rallies in the pair are likely to remain limited. At this stage, the US Dollar remains firmly in control.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- EUR/USD alternates gains with losses in the low 1.1600s on Tuesday.
- The US Dollar manages to rebound from earlier multi-day lows.
- The Middle East crisis continues to dictate the sentiment globally.
Since the rejection from annual highs near the 1.2100 barrier in late January, the short-term outlook for EUR/USD has been deteriorating uninterruptedly. The recent break below the important 200-day SMA also opens up the possibility of further retracements in the near-term horizon.
EUR/USD fades part of the recent recovery, coming under some selling pressure soon after challenging its critical 200-day SMA near 1.1670 on turnaround Tuesday.
The pair’s inconclusive price action comes on the back of the equally vacillating mood in the Greenback, with the US Dollar Index (DXY) struggling to reclaim the 99.00 hurdle and beyond so far this week.
Meanwhile, tensions in the Middle East remain anything but abated, although the latest comments from President Trump seem to have shed a ray of hope on a sooner rather than later end to the crisis, marginally improving the sentiment around the risk complex.
Fed: comfortable, but keeping options open
The Federal Reserve (Fed) left the Fed Funds Target Range (FFTR) unchanged at 3.50% to 3.75% in January, fully in line with market expectations.
The shift was not in the decision itself, but in the tone. The Federal Open Market Committee (FOMC) sounded noticeably more comfortable with the broader economic backdrop. Growth continues to hold up, employment risks are no longer seen as deteriorating, and although inflation remains somewhat elevated, the sense of urgency has clearly faded.
The 10 to 2 vote split, with two members favouring a 25 basis point cut, is a reminder that the internal debate is still very much alive.
Chair Jerome Powell described policy as being in a “good place”, reiterating that decisions will continue to be taken meeting by meeting. On tariffs, he acknowledged that they remain a factor behind recent inflation noise while also highlighting ongoing services disinflation. A rate hike is not the base case, but neither is an imminent pivot.
The Minutes reinforced that balanced message. Rate cuts remain possible if inflation continues to cool, although hikes have not been ruled out should price pressures prove persistent. In short, the Fed remains firmly data dependent.
Markets now price roughly 48 basis points of easing by year-end, although policymakers are widely expected to keep rates unchanged again at the March 18 meeting.
ECB: patient stance, steady message
The European Central Bank (ECB) also kept interest rates unchanged in a unanimous decision.
President Christine Lagarde struck a calm but cautious tone in her latest remarks. Inflation is still expected to return to the 2% target over the medium term, although services prices remain under close scrutiny, and further easing is projected into 2026.
Lagarde also pointed to resilient wages, a still-solid labour market and steady investment dynamics across the bloc. At the same time, she reiterated that while the ECB closely monitors the Euro (EUR), it does not target the exchange rate.
Markets currently price around 24 basis points of tightening by year-end, while a hold at the March meeting is almost fully discounted.
For now, the ECB appears broadly comfortable with the current policy stance while continuing to emphasise its data-dependent approach.
Positioning: Euro longs cool down a little
According to the most recent statistics from the Commodity Futures Trading Commission (CFTC), speculative positioning in the Euro (EUR) has become a little less strong.
Non-commercial net long holdings fell to around 136.5K contracts in the week ending March 3. This was the lowest level in five weeks and suggests that some investors have begun to cut back on their bullish exposure following the recent rise.
At the same time, institutional investors cut their net short holdings to around 184.6K contracts, which is also a multi-week low. The move shows that both sides of the market are changing their positions, not that there is a definite change in direction.
However, participation was rather steady, as open interest went up a little to around 913.3K contracts, which shows that activity in the market is still going strong even if speculative longs have pulled back a little.
Overall, the statistics show that the Euro's long bias is still in place, but traders seem to be losing some of their confidence as they look at the bigger picture.
Washington is still in charge
Near term: the US dollar is still the key factor affecting the pair. This is because the markets are still dealing with trade uncertainties and ongoing geopolitical concerns. The most important US data release this week is the inflation numbers that come out on Wednesday. After that, there are the Personal Consumption Expenditures (PCE), the weekly labour market report, and the preliminary U-Mich gauge.
Risks: If the geopolitical situation doesn't get better, a higher Greenback might put extra pressure on risky assets. From a technical point of view, a sustained break below the 200-day Simple Moving Average (SMA) would make a deeper decline more likely.
Technical landscape
In the daily chart, EUR/USD trades at 1.1634. The near-term bias turns mildly bearish as spot slips below the 55- and 100-day Simple Moving Averages (SMAs), which now cap the topside near 1.1760–1.1697 while the rising 200-day SMA around 1.1676 lags above price but loses immediate influence. The Relative Strength Index (RSI) holds below 40, signalling persistent downside momentum after the recent break lower, and the Average Directional Index (ADX) edges back toward 30, indicating strengthening trend conditions in favour of sellers rather than a range phase.
Initial resistance emerges at 1.1766, reinforced by the nearby 55- and 100-day SMAs, and a daily close above this area would be needed to ease bearish pressure and open the way toward the 1.2082 barrier. On the downside, immediate support stands at 1.1578, with a decisive break exposing the lower support band at 1.1491, followed by 1.1469 and 1.1392, where sellers would be expected to slow ahead of any deeper extension.
(The technical analysis of this story was written with the help of an AI tool.)
Bottom line: the Dollar remains in the driving seat
For now, EUR/USD continues to be driven far more by developments in Washington than by events in Frankfurt.
Until the Fed’s policy path becomes clearer, or the euro area delivers a stronger cyclical upswing, rallies in the pair are likely to remain limited. At this stage, the US Dollar remains firmly in control.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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