EUR/USD Forecast: Euro bulls retain control ahead of US data
- EUR/USD holds above 1.1750 after posting strong gains on Monday.
- The technical outlook highlights a buildup in bullish momentum.
- The US economic calendar will feature Q3 GDP data.
EUR/USD continues to edge higher toward 1.1800 after closing in positive territory and snapping a four-day losing streak on Monday. The renewed US Dollar (USD) weakness allows the pair to hold its ground as investors await the next batch of macroeconomic data releases from the US.
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 | -0.46% | -0.77% | -1.03% | -0.42% | -0.97% | -1.30% | -0.51% | |
| EUR | 0.46% | -0.29% | -0.59% | 0.04% | -0.50% | -0.83% | -0.04% | |
| GBP | 0.77% | 0.29% | -0.21% | 0.34% | -0.21% | -0.54% | 0.25% | |
| JPY | 1.03% | 0.59% | 0.21% | 0.64% | 0.11% | -0.22% | 0.44% | |
| CAD | 0.42% | -0.04% | -0.34% | -0.64% | -0.45% | -0.85% | -0.08% | |
| AUD | 0.97% | 0.50% | 0.21% | -0.11% | 0.45% | -0.03% | 0.47% | |
| NZD | 1.30% | 0.83% | 0.54% | 0.22% | 0.85% | 0.03% | 0.80% | |
| CHF | 0.51% | 0.04% | -0.25% | -0.44% | 0.08% | -0.47% | -0.80% |
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 USD came under bearish pressure in the American session on Monday as the bullish opening in Wall Street pointed to a risk-positive market atmosphere, despite growing concerns over a re-escalation of the Israel-Iran conflict.
Early Tuesday, US stock index futures trade marginally lower on the day, limiting EUR/USD's upside for the time being.
The US Bureau of Economic Analysis will publish the third-quarter Gross Domestic Product (GDP) data later in the day. Investors expect the US economy to expand at an annual rate of 3.2%, following the impressive 3.8% growth recorded in the second quarter. Because this data will already be a few months old by the times it's published, due to the delays caused by the US government shutdown, the market reaction is likely to be straightforward and remain short-lived. A stronger-than-expected growth figure could support the USD with the immediate reaction, while a disappointing print could have the opposite impact on the currency's valuation.
October Durable Goods Orders, November Industrial Production and the Conference Board's Consumer Confidence data for December will also be featured in the US economic calendar.
On Wednesday, stock and bond markets in the US will close early in observance of the Christmas Eve holiday, and remain closed on Christmas Day on Thursday. Hence, position adjustments and profit-taking could ramp up the market volatility in the second half of the day on Tuesday and trigger irregular movements in currency pairs.
EUR/USD Technical Analysis:
The 20-period Simple Moving Average (SMA) edges higher around 1.1735, still marginally beneath the rising 50 SMA near 1.1740, while the 100 and 200 SMAs continue to advance. Price holds above all these moving averages, keeping buyers in control. The Relative Strength Index (RSI) stands at 63, above the 50 midline and reflecting firm bullish momentum. A rising trend line from 1.1500 underpins the bias, offering support near 1.1720.
The first resistance level could be seen at 1.1800 (round level, static level) ahead of 1.1830 (upper limit of the ascending channel) and 1.1880 (static level). Looking south, support levels could be spotted at 1.1735-1.1740 (20-period SMA, 50-period SMA), 1.1720 (lower limit of the ascending channel, rising trend line) and 1.1685 (100-period SMA).
(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.
