EUR/USD Forecast: Bearish pressure builds up as safe-haven flows dominate
- EUR/USD trades at its lowest level in over a month below 1.1750.
- Escalating tensions in the Middle East cause investors to seek refuge.
- The technical outlook highlights a buildup of bearish pressure.
EUR/USD staged a rebound after opening with a bearish gap but turned south again, pressured by the risk-averse market atmosphere. The pair stays under pressure in the European session on Monday and trades slightly above 1.1700.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.70% | 0.88% | 0.44% | 0.13% | 0.56% | 0.76% | 0.40% | |
| EUR | -0.70% | 0.19% | -0.26% | -0.56% | -0.12% | 0.06% | -0.29% | |
| GBP | -0.88% | -0.19% | -0.44% | -0.75% | -0.32% | -0.12% | -0.48% | |
| JPY | -0.44% | 0.26% | 0.44% | -0.31% | 0.12% | 0.32% | -0.04% | |
| CAD | -0.13% | 0.56% | 0.75% | 0.31% | 0.43% | 0.63% | 0.27% | |
| AUD | -0.56% | 0.12% | 0.32% | -0.12% | -0.43% | 0.20% | -0.12% | |
| NZD | -0.76% | -0.06% | 0.12% | -0.32% | -0.63% | -0.20% | -0.35% | |
| CHF | -0.40% | 0.29% | 0.48% | 0.04% | -0.27% | 0.12% | 0.35% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The United States (US) and Israel carried out a joint attack on Iran over the weekend, killing Iranian Supreme Leader Ayatollah Ali Khamenei and up to 40 top Iranian officials. In retaliation, Iran targeted US assets across the Gulf and Hezbollah also announced that it launched strikes on Israeli missile defense sites.
BBC News reported that Iranian strikes around the region continue early Monday, with explosions reported in Bahrain and Dubai, and smoke seen near the US embassy in Kuwait. "On Sunday, an Iranian missile strike killed nine people in the Israeli city of Beit Shemesh," the outlet noted.
Reflecting the intense flight-to-safety, the US Dollar (USD) Index surges higher on Monday and gains nearly 0.8% on the day. Meanwhile, US stock index futures lose more than 1% on the day and the Euro Stoxx 50 Index is down about 2%.
In the second half of the day, the Institue for Supply Management (ISM) will publish the Manufacturing Purchasing Managers' Index (PMI) report for February. Investors are likely to ignore this report and stay focused on geopolitics.
Unless there is a sudden de-escalation in the conflict in the Middle East, the USD could continue to benefit from safe-haven flows and cause EUR/USD to extend its slide in the near term.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1722. The near-term bias is mildly bearish as price holds below the 20- and 50-period Simple Moving Averages (SMAs), while the 50-period SMA has slipped under the 100-period one near 1.1826. The Relative Strength Index (RSI) at 31 hovers just above oversold territory, indicating persistent selling pressure but also proximity to a potential downside exhaustion area.
Immediate resistance aligns with the 61.8% Fibonacci retracement of the 1.1590–1.2027 advance at 1.1757, with the 50% retracement at 1.1809 converging with the 200-period SMA to form a stronger barrier on any corrective bounce. A move above 1.1809 would open the way toward the 38.2% retracement at 1.1860, where the descending cluster of medium-term averages would be expected to cap gains. On the downside, initial support emerges at the 78.6% retracement at 1.1684, ahead of the 1.1590 swing low, a break of which would confirm a deeper bearish extension within the broader range.
(The technical analysis of this story was written with the help of an AI tool.)
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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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
