EUR/USD Price Forecast: Extra losses now appear on the cards
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UPGRADE- EUR/USD recedes further and prints new lows for the year around 1.1530.
- The US Dollar remains well bid amid safe haven demand and geopolitical jitters.
- Inflation in the euro area is expected to edge higher in February, as per flash prints.
The short-term outlook for EUR/USD has been consistently deteriorating since the rejection from yearly peaks near the 1.2100 hurdle recorded in late January. The continuation of the ongoing leg lower has also been gathering pace in tandem with the escalation of geopolitical tensions in the Middle East, which have ultimately lent strong support to the US Dollar (USD) via safe haven demand.
EUR/USD remains well on the back foot in the first half of the week, this time slipping back to the 1.1530 region for the first time since late November 2025. In doing so, spot has broken below its critical 200-day SMA around 1.1660, opening the door to further weakness down the road.
The pair’s second consecutive day of heavy losses follows the continuation of the move higher in the Greenback, which prompted the US Dollar Index (DXY) to start refocusing on a potential visit to the psychological 100.00 barrier.
Collaborating with the firm performance of the US Dollar, US Treasury yields jump to fresh tops across various maturity periods.
Fed: comfortable, but not committed
The Federal Reserve (Fed) left the Fed Funds Target Range (FFTR) unchanged at 3.50% to 3.75% in January, fully in line with expectations.
What changed was the tone. The Federal Open Market Committee (FOMC) sounded more relaxed about the backdrop. Growth is holding up, employment risks are no longer seen as deteriorating, and while inflation remains somewhat elevated, the sense of urgency has eased.
The 10 to 2 split, with two members favouring a 25 basis points cut, shows the debate is still alive. Chair Jerome Powell described policy as being in a good place, with decisions taken meeting by meeting. Tariffs were cited as a factor behind recent inflation noise, and services disinflation was highlighted as ongoing. A hike is not the base case, but neither is an imminent pivot.
The Minutes confirmed that balance. Cuts are possible if inflation cools, but hikes have not been ruled out if price pressures prove sticky. The Fed remains firmly data dependent.
ECB: steady stance, watchful eye
The European Central Bank (ECB) also kept rates unchanged in a unanimous decision.
President Christine Lagarde struck a calm but cautious tone last week: inflation is still expected to return to 2% over the medium term, with services prices under scrutiny and some easing projected into 2026. She pointed to resilient wages, a firm labour market and steady investment, while reiterating that the ECB monitors the Euro (EUR) but does not target it.
Markets price in around 10 basis points of easing this year, with a hold at the March meeting almost fully discounted. The ECB feels broadly comfortable but remains data-driven.
EUR positioning: long, but trimming at the edges
Commodity Futures Trading Commission (CFTC) data show speculative net longs in EUR eased to around 157K contracts in the week to February 24, a four week low. Institutional players have also pared back exposure.
The broader structure remains long EUR, but conviction is softening. Open interest has declined for a second consecutive week to roughly 911.3K contracts, signalling position trimming rather than aggressive fresh shorts.
In practical terms, the long bias is intact but less forceful. This looks like de risking, not capitulation. With positioning still elevated, the single currency remains sensitive to renewed US Dollar strength if US data continue to outperform.
What moves EUR/USD now
Near term: the US story is the most important one right now. The Greenback’s significance as the main driver is becoming bigger because of trade tensions and geopolitics.
On the calendar, the US ISM Services Purchasing Managers' Index (PMI) and the Fed Beige Book are next. However, in a changing context, headlines may be more important than planned releases.
A sustained breach below the 200-day Simple Moving Average (SMA) would make a deeper decline more likely.
Technical corner
In the daily chart, EUR/USD trades at 1.1596. The near-term bias turns bearish as spot slips below the rising 55- and 100-day Simple Moving Averages (SMAs), eroding the prior topside momentum seen earlier in the sequence. Price now hovers just beneath the 100-day SMA around 1.1698 and the 55-day SMA near 1.1770, which reinforces a shift towards selling pressure on rebounds. The Relative Strength Index (RSI) drops toward 31, moving out of mid-range territory and signalling building downside momentum, while the Average Directional Index (ADX) stabilising near the 20s reflects a weakening prior trend and opens room for an emerging down phase rather than an established directional move.
Immediate resistance emerges at 1.1766, aligning with the 55-day SMA cluster, with a break above this area needed to ease the current bearish tone and expose the 1.2082 barrier next. On the downside, initial support stands at 1.1530, just below the current price, and a sustained break there would confirm bears’ control and target the next support at 1.1491. If 1.1491 gives way, the focus would shift toward deeper levels at 1.1469 and 1.1392, where previous horizontal floors could attract dip buyers attempting to stabilise the pair.
(The technical analysis of this story was written with the help of an AI tool.)
Bottom line: Dollar in the driving seat
EUR/USD is being shaped far more by Washington than by Frankfurt.
Until the Fed’s rate path becomes clearer or the euro area delivers a stronger upswing, rallies are likely to remain contained. For now, it is Dollar first, euro second.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- EUR/USD recedes further and prints new lows for the year around 1.1530.
- The US Dollar remains well bid amid safe haven demand and geopolitical jitters.
- Inflation in the euro area is expected to edge higher in February, as per flash prints.
The short-term outlook for EUR/USD has been consistently deteriorating since the rejection from yearly peaks near the 1.2100 hurdle recorded in late January. The continuation of the ongoing leg lower has also been gathering pace in tandem with the escalation of geopolitical tensions in the Middle East, which have ultimately lent strong support to the US Dollar (USD) via safe haven demand.
EUR/USD remains well on the back foot in the first half of the week, this time slipping back to the 1.1530 region for the first time since late November 2025. In doing so, spot has broken below its critical 200-day SMA around 1.1660, opening the door to further weakness down the road.
The pair’s second consecutive day of heavy losses follows the continuation of the move higher in the Greenback, which prompted the US Dollar Index (DXY) to start refocusing on a potential visit to the psychological 100.00 barrier.
Collaborating with the firm performance of the US Dollar, US Treasury yields jump to fresh tops across various maturity periods.
Fed: comfortable, but not committed
The Federal Reserve (Fed) left the Fed Funds Target Range (FFTR) unchanged at 3.50% to 3.75% in January, fully in line with expectations.
What changed was the tone. The Federal Open Market Committee (FOMC) sounded more relaxed about the backdrop. Growth is holding up, employment risks are no longer seen as deteriorating, and while inflation remains somewhat elevated, the sense of urgency has eased.
The 10 to 2 split, with two members favouring a 25 basis points cut, shows the debate is still alive. Chair Jerome Powell described policy as being in a good place, with decisions taken meeting by meeting. Tariffs were cited as a factor behind recent inflation noise, and services disinflation was highlighted as ongoing. A hike is not the base case, but neither is an imminent pivot.
The Minutes confirmed that balance. Cuts are possible if inflation cools, but hikes have not been ruled out if price pressures prove sticky. The Fed remains firmly data dependent.
ECB: steady stance, watchful eye
The European Central Bank (ECB) also kept rates unchanged in a unanimous decision.
President Christine Lagarde struck a calm but cautious tone last week: inflation is still expected to return to 2% over the medium term, with services prices under scrutiny and some easing projected into 2026. She pointed to resilient wages, a firm labour market and steady investment, while reiterating that the ECB monitors the Euro (EUR) but does not target it.
Markets price in around 10 basis points of easing this year, with a hold at the March meeting almost fully discounted. The ECB feels broadly comfortable but remains data-driven.
EUR positioning: long, but trimming at the edges
Commodity Futures Trading Commission (CFTC) data show speculative net longs in EUR eased to around 157K contracts in the week to February 24, a four week low. Institutional players have also pared back exposure.
The broader structure remains long EUR, but conviction is softening. Open interest has declined for a second consecutive week to roughly 911.3K contracts, signalling position trimming rather than aggressive fresh shorts.
In practical terms, the long bias is intact but less forceful. This looks like de risking, not capitulation. With positioning still elevated, the single currency remains sensitive to renewed US Dollar strength if US data continue to outperform.
What moves EUR/USD now
Near term: the US story is the most important one right now. The Greenback’s significance as the main driver is becoming bigger because of trade tensions and geopolitics.
On the calendar, the US ISM Services Purchasing Managers' Index (PMI) and the Fed Beige Book are next. However, in a changing context, headlines may be more important than planned releases.
A sustained breach below the 200-day Simple Moving Average (SMA) would make a deeper decline more likely.
Technical corner
In the daily chart, EUR/USD trades at 1.1596. The near-term bias turns bearish as spot slips below the rising 55- and 100-day Simple Moving Averages (SMAs), eroding the prior topside momentum seen earlier in the sequence. Price now hovers just beneath the 100-day SMA around 1.1698 and the 55-day SMA near 1.1770, which reinforces a shift towards selling pressure on rebounds. The Relative Strength Index (RSI) drops toward 31, moving out of mid-range territory and signalling building downside momentum, while the Average Directional Index (ADX) stabilising near the 20s reflects a weakening prior trend and opens room for an emerging down phase rather than an established directional move.
Immediate resistance emerges at 1.1766, aligning with the 55-day SMA cluster, with a break above this area needed to ease the current bearish tone and expose the 1.2082 barrier next. On the downside, initial support stands at 1.1530, just below the current price, and a sustained break there would confirm bears’ control and target the next support at 1.1491. If 1.1491 gives way, the focus would shift toward deeper levels at 1.1469 and 1.1392, where previous horizontal floors could attract dip buyers attempting to stabilise the pair.
(The technical analysis of this story was written with the help of an AI tool.)
Bottom line: Dollar in the driving seat
EUR/USD is being shaped far more by Washington than by Frankfurt.
Until the Fed’s rate path becomes clearer or the euro area delivers a stronger upswing, rallies are likely to remain contained. For now, it is Dollar first, euro second.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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