EUR/USD Forecast: Euro bulls hesitate on last trading day of November
- EUR/USD edges lower after failing to stabilize above 1.1600.
- The technical outlook points to a loss of bullish momentum.
- Month-end flows could trigger irregular movements in the pair.
Following the bullish action seen in the first half of the week, EUR/USD corrects lower on Friday and declines toward 1.1550. The pair's technical outlook points to a loss of bullish momentum. Financial markets in the US will close early on Black Friday.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.55% | -0.86% | -0.17% | -0.46% | -1.02% | -1.67% | -0.32% | |
| EUR | 0.55% | -0.29% | 0.38% | 0.09% | -0.49% | -1.13% | 0.22% | |
| GBP | 0.86% | 0.29% | 0.68% | 0.39% | -0.19% | -0.85% | 0.52% | |
| JPY | 0.17% | -0.38% | -0.68% | -0.28% | -0.90% | -1.64% | -0.15% | |
| CAD | 0.46% | -0.09% | -0.39% | 0.28% | -0.58% | -1.24% | 0.14% | |
| AUD | 1.02% | 0.49% | 0.19% | 0.90% | 0.58% | -0.66% | 0.74% | |
| NZD | 1.67% | 1.13% | 0.85% | 1.64% | 1.24% | 0.66% | 1.39% | |
| CHF | 0.32% | -0.22% | -0.52% | 0.15% | -0.14% | -0.74% | -1.39% |
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).
After struggling to make a decisive move in either direction on the Thanksgiving Day on Thursday, EUR/USD stays on the back foot as markets adopt a cautious stance.
Earlier in the day, the data from Germany showed that Retail Sales declined by 0.3% on a monthly basis in October. This print followed the 0.3% increase recorded in September and came in weaker than the market expectation for an increase of 0.2%, making it difficult for the Euro to find demand.
In the second half of the day, November Consumer Price Index (CPI) data from Germany will be featured in the European economic calendar. Analysts expect the monthly CPI to decline by 0.3%. A positive print could support the Euro with the immediate reaction. Nevertheless, investors could refrain from taking large positions based on this data.
It's worth noting that month-end flows, combined with thin trading conditions, could ramp up the market volatility and cause some irregular movements in financial markets heading into the weekend.
EUR/USD Technical Analysis:
The 20-period Simple Moving Average (SMA) rises above the 50- and 100-period SMAs, suggesting an improving short-term bias, while the 200-period SMA flattens at 1.1585 and caps the recovery. RSI (14) holds at 51, neutral and consistent with a range-bound tone. Measured from the 1.1885 high to the 1.1472 low, the 23.6% retracement at 1.1569 has been reclaimed, with the 38.2% retracement at 1.1630 acting as the next resistance above 1.1585.
On the downside, immediate support is seen at 1.1569. This level is also reinforced by the 100-period SMA. A daily close below this level could open the door for an extended decline toward 1.1500 (static level, round level) and 1.1470 (static level).
(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.
