EUR/USD Forecast: Bulls look to retain control as risk mood improves
- EUR/USD trades in positive territory above 1.1600 on Thursday.
- The risk-positive market atmosphere hurts the US Dollar in the European session.
- Markets await official word on how the postponed US data will be handled.
EUR/USD holds its ground after posting gains for two consecutive days and trades at a fresh two-week high above 1.1600 in the European morning. In case risk flows continue to dominate the action in financial markets, the pair could continue to stretch higher.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.53% | -0.06% | 0.42% | -0.46% | -1.33% | -1.01% | -1.32% | |
| EUR | 0.53% | 0.45% | 1.02% | 0.08% | -0.84% | -0.52% | -0.83% | |
| GBP | 0.06% | -0.45% | 0.63% | -0.40% | -1.28% | -0.96% | -1.27% | |
| JPY | -0.42% | -1.02% | -0.63% | -0.96% | -1.81% | -1.49% | -1.84% | |
| CAD | 0.46% | -0.08% | 0.40% | 0.96% | -0.79% | -0.56% | -0.93% | |
| AUD | 1.33% | 0.84% | 1.28% | 1.81% | 0.79% | 0.32% | 0.01% | |
| NZD | 1.01% | 0.52% | 0.96% | 1.49% | 0.56% | -0.32% | -0.31% | |
| CHF | 1.32% | 0.83% | 1.27% | 1.84% | 0.93% | -0.01% | 0.31% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
US President Donald Trump has signed the temporary funding bill after it was approved by the House of Representatives late Wednesday, bringing an end to the longest government shutdown in US history.
White House press secretary Karoline Leavitt told reporters that the Bureau of Labor Statistics (BLS) might never be able to release the employment and inflation data for October because the government shutdown caused data collection to freeze. Markets expect the Nonfarm Payrolls (NFP) data for September to be released next week but there is no official confirmation yet.
In the second half of the day, several Federal Reserve (Fed) policymakers will be delivering speeches. In case officials suggest that they might need to hold the policy settings unchanged in December, citing the uncertainty created by the lack of data, the US Dollar (USD) could show some resilience and limit EUR/USD's upside. According to the CME FedWatch Tool, markets are currently pricing in about a 58% probability of the Fed lowering the policy rate by 25 basis points at the last meeting of the year.
Meanwhile, US stock index futures were last seen gaining about 0.2% on the day. A bullish opening in Wall Street could cause the USD to weaken and open the door for a leg higher in EUR/USD.
EUR/USD Technical Analysis
In the 4-hour chart, EUR/USD trades at 1.1616, posting marginal gains for the day. The Simple Moving Averages (SMA) point to a firmer tone, with the 20-period rising above the 100-period while the 50-period also slopes higher. Price holds over the 20, 50 and 100 SMAs, though the gently descending 200-period SMA still caps the upside. The Relative Strength Index (RSI) at 66.8 strengthens, approaching overbought and reinforcing bullish momentum.
Measured from the 1.1880 high to 1.1470 low, the 23.6% retracement at 1.1567 offers support on dips, while a topside extension would expose the 50% retracement at 1.1676. Secondary support rests at 1.1401. A sustained break above the 200-period SMA would improve the near-term bias and put 1.1676 back in sight, whereas a close below 1.1567 would shift focus toward 1.1401.
(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.
