EUR/USD Weekly Forecast: Under pressure as the Dollar reclaims momentum
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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.
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 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.
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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