EUR/USD Forecast: Bearish pressure persists as Middle East crisis worsens
- EUR/USD trades deep in negative territory below 1.1550.
- The US Dollar continues to gather strength to start the week.
- Crude Oil prices surge as the crisis in the Middle East deepens.
EUR/USD started the week with a bearish gap and declined toward 1.1500 before recovering slightly. At the time of press, the pair was trading at 1.1525, losing about 0.8% on a daily basis.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.65% | 0.59% | 0.48% | -0.07% | 0.44% | 0.23% | 0.45% | |
| EUR | -0.65% | -0.07% | -0.22% | -0.71% | -0.21% | -0.42% | -0.21% | |
| GBP | -0.59% | 0.07% | -0.15% | -0.64% | -0.14% | -0.35% | -0.13% | |
| JPY | -0.48% | 0.22% | 0.15% | -0.54% | -0.03% | -0.24% | -0.02% | |
| CAD | 0.07% | 0.71% | 0.64% | 0.54% | 0.51% | 0.29% | 0.52% | |
| AUD | -0.44% | 0.21% | 0.14% | 0.03% | -0.51% | -0.21% | 0.01% | |
| NZD | -0.23% | 0.42% | 0.35% | 0.24% | -0.29% | 0.21% | 0.23% | |
| CHF | -0.45% | 0.21% | 0.13% | 0.02% | -0.52% | -0.01% | -0.23% |
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).
Crude Oil prices rose sharply at the opening with no signs of a de-escalation in the Middle East conflict.
Although Iranian President Masoud Pezeshkian apologised to the neighbouring countries over the weekend and announced that Tehran will not strike "unless they attack first," the disruption in Strait of Hormuz remains unchecked. Several major oil producers in the region, including the United Arab Emirates and Iraq, have decided to reduce Oil production, citing a lack of storage space because of tankers refusing to pass through the strait. As of writing, the barrel of West Texas Intermediate was trading near $103, rising more than 13% on the day.
Rising Oil prices and growing fears over a prolonged crisis force investors to adopt a cautious stance on Monday. The US Dollar (USD) Index, which trackes the USD's performance against a basket of six major currencies, was last seen rising 0.7% on the day at 99.50. Reflecting the intense flight-to-safety action, US stock index futures are down about 1.5% in the European session on Monday, while Euro Stoxx 50 Index loses more than 2.5%.
Investors will remain focused on geopolitics because the economic calendar will not feature any high-tier data releases on Monday.
The International Energy Agency (IEA) is reportedly discussing a coordinated release of emergency oil reserves among G7 members to stabilize the energy markets. In case Oil prices correct sharply lower following an intevention, the risk mood could improve with the immediate reaction and help EUR/USD find a foothold. Unless there is a noticeable de-escalation, however, the pair's recovery attempts could remain short-lived.
EUR/USD Technical Analysis:
The near-term bias is mildly bearish as the pair holds below the 20-, 50-, 100- and 200-period Simple Moving Averages (SMAs) on the 4-hour chart, which all slope lower and cap recovery attempts. Price trades near the lower area of the recent Bollinger Bands, reflecting persistent downside pressure after the recent slide from the mid-1.17s. The Relative Strength Index (RSI) sits in the low-30s, staying below the 50 line and reinforcing bearish bias without yet signaling an extreme oversold condition.
Immediate resistance emerges at 1.1570, where a horizontal barrier aligns just ahead of the descending 20-period SMA near 1.1600 and the 50-period SMA slightly higher, forming a resistance zone that would need clearing to ease bearish pressure. Above that, the next resistance is seen at 1.1670. On the downside, initial support stands at 1.1500, followed by a more distant floor at 1.1460, with a deeper level at 1.1401 only coming into play if sellers extend the current downtrend.
(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.
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.
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