EUR/USD Forecast: Buyers hesitate as markets remain choppy
- EUR/USD stays under modest bearish pressure in the European session on Tuesday.
- The technical outlook points to a bearish tilt in the short term.
- Sellers could remain interested unless EUR/USD reclaims 1.1650.
EUR/USD struggles to gain traction and trades in negative territory below 1.1650 after posting marginal losses on Monday. The pair's near-term technical outlook highlights increasing seller interest.
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 | 0.14% | 0.15% | 0.44% | 0.17% | 0.49% | 0.52% | 0.06% | |
| EUR | -0.14% | 0.01% | 0.28% | 0.03% | 0.35% | 0.37% | -0.08% | |
| GBP | -0.15% | -0.01% | 0.26% | 0.02% | 0.34% | 0.36% | -0.09% | |
| JPY | -0.44% | -0.28% | -0.26% | -0.28% | 0.05% | 0.07% | -0.37% | |
| CAD | -0.17% | -0.03% | -0.02% | 0.28% | 0.32% | 0.35% | -0.11% | |
| AUD | -0.49% | -0.35% | -0.34% | -0.05% | -0.32% | 0.02% | -0.45% | |
| NZD | -0.52% | -0.37% | -0.36% | -0.07% | -0.35% | -0.02% | -0.45% | |
| CHF | -0.06% | 0.08% | 0.09% | 0.37% | 0.11% | 0.45% | 0.45% |
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 US Dollar (USD) held resilient against its peers on Monday and made it difficult for EUR/USD to build on previous week's gains.
In the absence of high-impact data releases, United States (US) Donald Trump's optimistic comments about the trade relations with China eased concerns over a deepening conflict. Ahead of his highly-anticipated meeting with Chinese President Xi Jinping on the sidelines of an economic conference in South Korea next week, Trump reiterated that he thinks that they will have a "very strong deal" with China.
In the meantime, the government shutdown in the US prolongs after the Senate rejected the stopgap funding bill for the 11th time on Monday. This development seems to be limiting the USD's gains and helping EUR/USD hold its ground.
The economic calendar will not offer any key data on Tuesday. Hence, investors will remain focused on headlines surrounding the US-China trade negotiations. In case sides voice their willingness to de-escalate the situation, the USD could gather strength and cause EUR/USD to stretch lower.
Later in the session, European Central Bank (ECB) President Christine Lagarde is scheduled to deliver a speech at Norges Bank's Climate Conference, during which she is unlikely to comment on the policy or the economic outlook.
EUR/USD Technical Analysis
EUR/USD closed below the 100-day Simple Moving Average (SMA), currently located at 1.1650, and the Relative Strength Index (RSI) indicator on the 4-hour chart dropped below 50, pointing to a bearish tilt in the short-term outlook.
Looking south, the next support level could be spotted at 1.1580 (Fibonacci 61.8% retracement of the latest uptrend) before 1.1550 (static level). On the upside, resistances align at 1.1650 (100-day SMA), 1.1700 (50-day SMA) and 1.1765 (Fibonacci 23.6% retracement).
Euro FAQs
The Euro is the currency for the 19 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.
