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EUR/USD Forecast: Euro bulls hesitate as focus shifts to US data

  • EUR/USD fluctuates at around 1.1650 in the European session on Tuesday.
  • The technical outlook points to a loss of bullish momentum in the short term.
  • The US economic calendar will feature employment-related data releases.

EUR/USD stays relatively quiet and moves sideways at around 1.1650 in the European morning on Tuesday, after posting marginal losses on Monday. The US economic calendar will offer employment-related data releases but investors could refrain from taking large positions ahead of the Federal Reserve's (Fed) policy meeting.

Euro Price This Month

The table below shows the percentage change of Euro (EUR) against listed major currencies this month. Euro was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD-0.41%-0.69%-0.05%-0.87%-1.40%-0.86%0.33%
EUR0.41%-0.28%0.36%-0.46%-1.00%-0.46%0.74%
GBP0.69%0.28%0.89%-0.18%-0.72%-0.18%1.02%
JPY0.05%-0.36%-0.89%-0.82%-1.38%-0.82%0.36%
CAD0.87%0.46%0.18%0.82%-0.60%0.01%1.20%
AUD1.40%1.00%0.72%1.38%0.60%0.55%1.75%
NZD0.86%0.46%0.18%0.82%-0.01%-0.55%1.20%
CHF-0.33%-0.74%-1.02%-0.36%-1.20%-1.75%-1.20%

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 negative shift seen in risk mood helped the US Dollar (USD) find a foothold in the second half of the day on Monday and caused EUR/USD to stretch lower. US President Donald Trump's renewed tariff threats on Mexico and Canada might have caused investors to adopt a cautious stance. Early Tuesday, US stock index futures trade flat.

Later in the session, the US Bureau of Economic Analysis will release the JOLTS Job Openings data for September and October. A noticeable decline in these data could weigh on the USD with the immediate reaction. Additionally, the Automatic Data Processing (ADP) will release the Employment Change 4-week Average. A positive reading could be supportive for the USD in the immediate term.

Nevertheless, the market reaction to these data is likely to remain short-lived, with participants opting to wait for the Fed to announce policy decisions and release the revised Summary of Economic Projections in the American session on Wednesday.

Chart Analysis EUR/USD

EUR/USD Technical Analysis:

The 20-period Simple Moving Average (SMA) eases to 1.1651, while the 50-, 100- and 200-period SMAs continue to grind higher. Price holds above the longer SMAs but sits under the 20-period SMA, keeping gains contained. RSI at 51 is neutral, pointing to subdued momentum. The rising trend line from 1.1496 offers support near 1.1630, which is also reinforced by the Fibonacci 38.2% retracement.The 50% retracement at 1.1680 aligns as the next resistance level.

A drop below 1.1630 could attract technical sellers and open the door for a deeper pullback toward 1.1570 (Fibonacci 23.6% retracement).

(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

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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