EUR/USD Weekly Forecast: Fed calm, ECB steady, but the Dollar still leads
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UPGRADE- EUR/USD maintains its erratic performance around the 1.1800 region.
- The US Dollar weakens modestly amid trade uncertainty and geopolitical tensions.
- Investors' attention now shifts to next week's US labour market report.
- Inflation in Germany is seen easing a tad in February, as per preliminary data.
EUR/USD is still struggling to find real traction. The pair has tried to stabilise, but momentum keeps fading, leaving the door open to further weakness. If sellers manage a convincing break below the monthly floor near 1.1740, the spotlight would quickly shift to the critical 200-day Simple Moving Average (SMA).
By the end of the week, EUR/USD is nursing only marginal gains. The 1.1800 barrier remains stubbornly out of reach, and that inability to break higher tells its own story.
The choppy price action fits the broader mood across global markets. There has been no clear direction, just a steady digestion of last week’s US Supreme Court ruling against President Trump’s global tariffs. Add renewed trade uncertainty and rising geopolitical tensions in the Middle East, with Washington and Tehran back in a verbal standoff, and it is hardly surprising that conviction has been limited.
In this environment, assets have been drifting rather than trending.
ECB: confident, but not complacent
The European Central Bank also left rates unchanged, in a unanimous and widely anticipated decision.
The message was disciplined. Inflation is still projected to return to the 2% target over the medium term. Wage pressures are stabilising, services inflation remains under close scrutiny, and a modest dip in prices is expected in 2026.
The key moment this week was Christine Lagarde’s testimony before the European Parliament. She sounded confident but cautious. Inflation, she insisted, is on track to return to 2% over time, with food price pressures gradually easing into 2026. She highlighted support from solid wage growth, a resilient labour market and firmer investment. At the same time, she reiterated that the ECB monitors the euro but does not target it and noted there are no visible signs yet of AI-driven job losses.
The takeaway is straightforward: the ECB feels policy is well calibrated but remains fully data dependent and ready to adjust if needed.
On the inflation front, preliminary figures from Germany point to Consumer Price Index (CPI) growth of 1.9% YoY in February, slightly below the 2.0% recorded at the start of the year. A gentle cooling, but nothing dramatic.
Positioning: conviction on both sides
Positioning data tell an interesting story. Speculative net longs in the euro have climbed to their highest levels since 2020. At the same time, short positions have also risen sharply.
When both sides increase exposure simultaneously, it signals conviction and tension, not a one-way bet.
Open interest remains elevated. This is not a thin, illiquid move. It is a proper battle.
Net positioning still favours the euro overall, but the build-up in opposing shorts makes the upside more fragile and highly sensitive to incoming macro surprises.
Near-term drivers: the Dollar still sets the pace
In the short-term horizon, the US Dollar continues to set the tone. Trade headlines and geopolitical developments are adding noise, and the relative quiet from the ECB is doing little to shift the balance.
The risk scenario is clear. If the Fed maintains its cautious stance and US data remain firm, the Dollar keeps a natural floor. A decisive break below the 200-day SMA would materially weaken the technical picture and increase the probability of a deeper correction.
Technical corner
In the daily chart, EUR/USD trades at 1.1815. The near-term bias is mildly bullish as spot holds above the rising 55- and 100-day Simple Moving Averages (SMAs), which trade just below 1.1800 and cluster well above the 200-day SMA near 1.1700, indicating an underlying upward trend structure. Price action has been consolidating after the late advance, but the Relative Strength Index (RSI) around 51 stays marginally above its midline, suggesting buyers retain a slight momentum edge despite the waning Average Directional Index (ADX), which points to a loss of trend strength rather than a reversal.
Immediate support emerges at 1.1766, where horizontal support aligns beneath spot and coincides with the nearby SMAs, and a break below this area would expose the next downside level at 1.1578. On the upside, initial resistance is seen at 1.2082, the first marked horizontal barrier above the market, with a continuation higher targeting 1.2266 and then 1.2350. As long as EUR/USD defends 1.1766 on daily closes, the path of least resistance favours further tests of overhead resistance, while a sustained move below that level would shift the focus back toward the broader support band starting near 1.1578.
(The technical analysis of this story was written with the help of an AI tool.)
Macro bias: Washington in the driver’s seat
Right now, EUR/USD is being driven far more by Washington than by Frankfurt.
Until the Fed’s 2026 rate path becomes clearer, or the euro area delivers a more convincing cyclical upswing, rallies are likely to remain measured and vulnerable.
For now, it remains Dollar first, Euro second.
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 maintains its erratic performance around the 1.1800 region.
- The US Dollar weakens modestly amid trade uncertainty and geopolitical tensions.
- Investors' attention now shifts to next week's US labour market report.
- Inflation in Germany is seen easing a tad in February, as per preliminary data.
EUR/USD is still struggling to find real traction. The pair has tried to stabilise, but momentum keeps fading, leaving the door open to further weakness. If sellers manage a convincing break below the monthly floor near 1.1740, the spotlight would quickly shift to the critical 200-day Simple Moving Average (SMA).
By the end of the week, EUR/USD is nursing only marginal gains. The 1.1800 barrier remains stubbornly out of reach, and that inability to break higher tells its own story.
The choppy price action fits the broader mood across global markets. There has been no clear direction, just a steady digestion of last week’s US Supreme Court ruling against President Trump’s global tariffs. Add renewed trade uncertainty and rising geopolitical tensions in the Middle East, with Washington and Tehran back in a verbal standoff, and it is hardly surprising that conviction has been limited.
In this environment, assets have been drifting rather than trending.
ECB: confident, but not complacent
The European Central Bank also left rates unchanged, in a unanimous and widely anticipated decision.
The message was disciplined. Inflation is still projected to return to the 2% target over the medium term. Wage pressures are stabilising, services inflation remains under close scrutiny, and a modest dip in prices is expected in 2026.
The key moment this week was Christine Lagarde’s testimony before the European Parliament. She sounded confident but cautious. Inflation, she insisted, is on track to return to 2% over time, with food price pressures gradually easing into 2026. She highlighted support from solid wage growth, a resilient labour market and firmer investment. At the same time, she reiterated that the ECB monitors the euro but does not target it and noted there are no visible signs yet of AI-driven job losses.
The takeaway is straightforward: the ECB feels policy is well calibrated but remains fully data dependent and ready to adjust if needed.
On the inflation front, preliminary figures from Germany point to Consumer Price Index (CPI) growth of 1.9% YoY in February, slightly below the 2.0% recorded at the start of the year. A gentle cooling, but nothing dramatic.
Positioning: conviction on both sides
Positioning data tell an interesting story. Speculative net longs in the euro have climbed to their highest levels since 2020. At the same time, short positions have also risen sharply.
When both sides increase exposure simultaneously, it signals conviction and tension, not a one-way bet.
Open interest remains elevated. This is not a thin, illiquid move. It is a proper battle.
Net positioning still favours the euro overall, but the build-up in opposing shorts makes the upside more fragile and highly sensitive to incoming macro surprises.
Near-term drivers: the Dollar still sets the pace
In the short-term horizon, the US Dollar continues to set the tone. Trade headlines and geopolitical developments are adding noise, and the relative quiet from the ECB is doing little to shift the balance.
The risk scenario is clear. If the Fed maintains its cautious stance and US data remain firm, the Dollar keeps a natural floor. A decisive break below the 200-day SMA would materially weaken the technical picture and increase the probability of a deeper correction.
Technical corner
In the daily chart, EUR/USD trades at 1.1815. The near-term bias is mildly bullish as spot holds above the rising 55- and 100-day Simple Moving Averages (SMAs), which trade just below 1.1800 and cluster well above the 200-day SMA near 1.1700, indicating an underlying upward trend structure. Price action has been consolidating after the late advance, but the Relative Strength Index (RSI) around 51 stays marginally above its midline, suggesting buyers retain a slight momentum edge despite the waning Average Directional Index (ADX), which points to a loss of trend strength rather than a reversal.
Immediate support emerges at 1.1766, where horizontal support aligns beneath spot and coincides with the nearby SMAs, and a break below this area would expose the next downside level at 1.1578. On the upside, initial resistance is seen at 1.2082, the first marked horizontal barrier above the market, with a continuation higher targeting 1.2266 and then 1.2350. As long as EUR/USD defends 1.1766 on daily closes, the path of least resistance favours further tests of overhead resistance, while a sustained move below that level would shift the focus back toward the broader support band starting near 1.1578.
(The technical analysis of this story was written with the help of an AI tool.)
Macro bias: Washington in the driver’s seat
Right now, EUR/USD is being driven far more by Washington than by Frankfurt.
Until the Fed’s 2026 rate path becomes clearer, or the euro area delivers a more convincing cyclical upswing, rallies are likely to remain measured and vulnerable.
For now, it remains Dollar first, Euro second.
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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