EUR/USD Forecast: Euro bulls retain control ahead of US data
- EUR/USD builds on weekly gains, rises toward 1.1650.
- The US economic calendar will feature key data releases on Wednesday.
- The technical outlook suggests there is more room on the upside before the pair turns overbought.
EUR/USD holds its ground and rises to the 1.1650 region in the European morning on Wednesday, after closing in positive territory on Monday and Tuesday. The pair's technical picture confirms the bullish bias in the near term.
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 | -0.40% | -0.02% | -0.34% | -0.06% | -0.55% | -0.35% | -0.22% | |
| EUR | 0.40% | 0.39% | 0.05% | 0.34% | -0.14% | 0.07% | 0.18% | |
| GBP | 0.02% | -0.39% | -0.08% | -0.04% | -0.53% | -0.31% | -0.20% | |
| JPY | 0.34% | -0.05% | 0.08% | 0.28% | -0.22% | -0.00% | 0.11% | |
| CAD | 0.06% | -0.34% | 0.04% | -0.28% | -0.54% | -0.27% | -0.17% | |
| AUD | 0.55% | 0.14% | 0.53% | 0.22% | 0.54% | 0.21% | 0.32% | |
| NZD | 0.35% | -0.07% | 0.31% | 0.00% | 0.27% | -0.21% | 0.11% | |
| CHF | 0.22% | -0.18% | 0.20% | -0.11% | 0.17% | -0.32% | -0.11% |
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 broad-based selling pressure on the US Dollar (USD) on growing expectations for a dovish Federal Reserve (Fed) policy outlook next year helps EUR/USD preserve its bullish momentum. US President Donald Trump hinted that he wants to nominate his chief economic adviser Kevin Hassett, who is widely seen as a dove, to replace outgoing Fed Chairman Jerome Powell next year.
In the second half of the day, the US economic calendar will feature the Automatic Data Processing's private sector employment data and the Institute for Supply Management's (ISM) Services Purchasing Managers' Index (PMI) report for November.
Since the official employment report, which will show Nonfarm Payrolls (NFP) figures, will be released after the Fed meets for the last time this year, investors will pay close attention to the Employment Index of the PMI report.
In case the Employment Index recovers above 50 and reflects an expansion in service sector payrolls, the USD could stage a rebound with the immediate reaction and limit EUR/USD's upside. On the other hand, a reading below October's 48.2 could have the opposite impact on the USD's valuation, opening the door for a leg higher in the pair.
EUR/USD Technical Analysis:
The 20-period Simple Moving Average (SMA) rises above the 50-, 100-, and 200-period SMAs, while price holds above all of them. The 50- and 100-period SMAs edge higher as the 200-period SMA remains flat, with the 20 SMA at 1.1610 offering nearby dynamic support. The 14-period RSI sits at 68, near overbought and consistent with firm momentum.
Measured from the 1.1885 high to the 1.1472 low, EUR/USD holds above the 38.2% retracement at 1.1630, turning the spotlight on the 50% retracement at 1.1679. A sustained break above 1.1679 would open the path toward 1.1730 (Fibonacci 61.8% retracement) and 1.1800 (Fibonacci 78.6% retracement), while failure to defend 1.1630 could send the pair back toward the 200-period SMA at 1.1585 before the static support at 1.1551.
(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.
