EUR/USD Price Forecast: Upside remains capped by 1.1650
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UPGRADE- EUR/USD could not sustain earlier gains and receded toward 1.1500.
- The US Dollar seems to have embarked on a range-bound theme near recent tops.
- Markets’ attention remains on US data, with Retail Sales and PPI coming up next.
EUR/USD remains under pressure, slipping back toward the lower end of its recent range and close to the key support at 1.1500 the figure in quite a slow start to the new trading week.
Indeed, the pair’s price action comes amid marginal gains in the US Dollar (USD), which managed to revert earlier losses as investors keep digesting the latest Nonfarm Payrolls figures in September (+119K), while bets for further interest rate cuts by the Federal Reserve (Fed) seem to have picked up renewed traction.
Against that, the US Dollar Index (DXY) appears mildly bid and somewhat flattish in the upper end of its recent range, north of the psychologically significant 100.00 barrier, while US Treasury yields remain mixed across various time frames.
Shutdown resolved… but only just
Washington has finally wrapped up the 43-day shutdown, though calling it a “solution” feels generous. Congress only funded the government until January 30, so the countdown to the next showdown has already begun.
This one also flipped the usual political script. Budget standoffs are normally driven by Republicans, but this time it was Democrats who took things right to the edge. Almost lost in the noise is the bigger issue: the national debt has hit roughly $38 trillion and is growing by nearly $1.8 trillion every year.
Senate Democrats argued that the economic hit, delayed benefits, missed paycheques, and stalled services were worth it if it sparked a broader debate on surging health insurance costs affecting around 24 million Americans. Republicans pushed back, saying the damage wasn’t worth the fight, a stance typically associated with Democrats.
US–China relations get a moment of calm
After months of tit-for-tat tensions, Donald Trump and Xi Jinping met in South Korea in late October, giving markets a rare breather. The two agreed to extend the current pause in the US–China trade war, not a breakthrough, but at least a halt to further escalation.
Following the meeting, Trump said the US would roll back some tariffs, while China agreed to resume soybean purchases, maintain rare-earth exports, and step up cooperation on fentanyl controls.
Beijing later confirmed the ceasefire will hold for another year. It doesn’t fix the deeper structural issues, but it does show both sides prefer talking over escalating, at least for now.
Fed stays cautious
The Federal Reserve delivered exactly what markets expected at its October 29 event: a 25 basis point rate cut and a restart of light Treasury purchases to ease money market strains.
The vote came in at 10–2, taking the Fed Funds Target Range (FFTR) down to 3.75%–4.00%. Policymakers framed the move as a precaution rather than the start of a deeper easing cycle.
Fed Chair Jerome Powell highlighted the wide range of views within the Federal Open Market Committee (FOMC) and warned investors not to assume a December cut is guaranteed.
The Minutes echoed that internal split. Officials backed October’s cut even as some worried that easing too quickly could set back the effort to guide inflation back toward the 2% target, a goal that’s been out of reach for more than four years.
Right now, markets see just over a 67% chance of another cut on December 10 and around 91 basis points of easing priced in by the end of 2026.
ECB comfortable staying on pause
Across the Atlantic, the European Central Bank (ECB) kept its policy rate unchanged at 2.00% for a third consecutive meeting. With both growth and inflation sitting near target, and after delivering 200 basis points of cuts earlier this year, officials see little need to adjust policy again.
ECB President Christine Lagarde noted that global risks have eased slightly thanks to the US–China truce and selective US tariff rollbacks, but she also stressed that uncertainty remains high.
Markets now assign nearly a 97% chance that rates stay unchanged next month, with barely 8 basis points of further easing priced in by end-2026, essentially signalling that the ECB is done cutting for now.
Tech corner
Despite occasional bouts of strength, EUR/USD remains under scrutiny, with the likelihood of extra weakness still well in the pipeline.
Indeed, the breach below the November floor at 1.1468 (November 5) could pave the way for a potential move toward the key 200-day SMA at 1.1409, which continues to underpin the August base at 1.1391 (August 1). South from here sits the weekly trough at 1.1210 (May 29) ahead of the May bottom at 1.1064 (May 12).
On the flip side, the November top at 1.1656 (November 13) remains propped up by the transitory 55-day and 100-day SMAs, while a move above this region exposes the weekly tops at 1.1668 (October 28) and 1.1728 (October 17), prior to the October peak at 1.1778 (October 1).
Additionally, momentum indicators keep favouring extra declines for the time being. That said, the Relative Strength Index (RSI) eases toward the 39 level, while the Average Directional Index (ADX) below 15 suggests a still pale trend.
Looking at the big picture
EUR/USD has been grinding lower since hitting its YTD highs above 1.1900 in September. With few domestic catalysts on the horizon, short-term direction will mostly hinge on the Greenback. Any shift in the Fed’s tone, a broader improvement in global risk appetite, or a more noticeable rotation toward Eurozone assets could all help the single currency mount a more convincing recovery.
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 could not sustain earlier gains and receded toward 1.1500.
- The US Dollar seems to have embarked on a range-bound theme near recent tops.
- Markets’ attention remains on US data, with Retail Sales and PPI coming up next.
EUR/USD remains under pressure, slipping back toward the lower end of its recent range and close to the key support at 1.1500 the figure in quite a slow start to the new trading week.
Indeed, the pair’s price action comes amid marginal gains in the US Dollar (USD), which managed to revert earlier losses as investors keep digesting the latest Nonfarm Payrolls figures in September (+119K), while bets for further interest rate cuts by the Federal Reserve (Fed) seem to have picked up renewed traction.
Against that, the US Dollar Index (DXY) appears mildly bid and somewhat flattish in the upper end of its recent range, north of the psychologically significant 100.00 barrier, while US Treasury yields remain mixed across various time frames.
Shutdown resolved… but only just
Washington has finally wrapped up the 43-day shutdown, though calling it a “solution” feels generous. Congress only funded the government until January 30, so the countdown to the next showdown has already begun.
This one also flipped the usual political script. Budget standoffs are normally driven by Republicans, but this time it was Democrats who took things right to the edge. Almost lost in the noise is the bigger issue: the national debt has hit roughly $38 trillion and is growing by nearly $1.8 trillion every year.
Senate Democrats argued that the economic hit, delayed benefits, missed paycheques, and stalled services were worth it if it sparked a broader debate on surging health insurance costs affecting around 24 million Americans. Republicans pushed back, saying the damage wasn’t worth the fight, a stance typically associated with Democrats.
US–China relations get a moment of calm
After months of tit-for-tat tensions, Donald Trump and Xi Jinping met in South Korea in late October, giving markets a rare breather. The two agreed to extend the current pause in the US–China trade war, not a breakthrough, but at least a halt to further escalation.
Following the meeting, Trump said the US would roll back some tariffs, while China agreed to resume soybean purchases, maintain rare-earth exports, and step up cooperation on fentanyl controls.
Beijing later confirmed the ceasefire will hold for another year. It doesn’t fix the deeper structural issues, but it does show both sides prefer talking over escalating, at least for now.
Fed stays cautious
The Federal Reserve delivered exactly what markets expected at its October 29 event: a 25 basis point rate cut and a restart of light Treasury purchases to ease money market strains.
The vote came in at 10–2, taking the Fed Funds Target Range (FFTR) down to 3.75%–4.00%. Policymakers framed the move as a precaution rather than the start of a deeper easing cycle.
Fed Chair Jerome Powell highlighted the wide range of views within the Federal Open Market Committee (FOMC) and warned investors not to assume a December cut is guaranteed.
The Minutes echoed that internal split. Officials backed October’s cut even as some worried that easing too quickly could set back the effort to guide inflation back toward the 2% target, a goal that’s been out of reach for more than four years.
Right now, markets see just over a 67% chance of another cut on December 10 and around 91 basis points of easing priced in by the end of 2026.
ECB comfortable staying on pause
Across the Atlantic, the European Central Bank (ECB) kept its policy rate unchanged at 2.00% for a third consecutive meeting. With both growth and inflation sitting near target, and after delivering 200 basis points of cuts earlier this year, officials see little need to adjust policy again.
ECB President Christine Lagarde noted that global risks have eased slightly thanks to the US–China truce and selective US tariff rollbacks, but she also stressed that uncertainty remains high.
Markets now assign nearly a 97% chance that rates stay unchanged next month, with barely 8 basis points of further easing priced in by end-2026, essentially signalling that the ECB is done cutting for now.
Tech corner
Despite occasional bouts of strength, EUR/USD remains under scrutiny, with the likelihood of extra weakness still well in the pipeline.
Indeed, the breach below the November floor at 1.1468 (November 5) could pave the way for a potential move toward the key 200-day SMA at 1.1409, which continues to underpin the August base at 1.1391 (August 1). South from here sits the weekly trough at 1.1210 (May 29) ahead of the May bottom at 1.1064 (May 12).
On the flip side, the November top at 1.1656 (November 13) remains propped up by the transitory 55-day and 100-day SMAs, while a move above this region exposes the weekly tops at 1.1668 (October 28) and 1.1728 (October 17), prior to the October peak at 1.1778 (October 1).
Additionally, momentum indicators keep favouring extra declines for the time being. That said, the Relative Strength Index (RSI) eases toward the 39 level, while the Average Directional Index (ADX) below 15 suggests a still pale trend.
Looking at the big picture
EUR/USD has been grinding lower since hitting its YTD highs above 1.1900 in September. With few domestic catalysts on the horizon, short-term direction will mostly hinge on the Greenback. Any shift in the Fed’s tone, a broader improvement in global risk appetite, or a more noticeable rotation toward Eurozone assets could all help the single currency mount a more convincing recovery.
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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