EUR/USD Forecast: Euro bulls return ahead of key US events
- EUR/USD rises toward 1.1400 on renewed USD weakness on Wednesday.
- US economic calendar will feature Retail Sales data for March.
- Fed Chairman Jerome Powell will deliver a speech on the economic outlook.
After closing in negative territory on Tuesday, EUR/USD gathers bullish momentum and climbs toward 1.1400 on Wednesday. The technical outlook points to a bullish tilt in the near term.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.52% | -0.32% | -0.31% | -0.31% | -0.74% | -0.40% | -0.55% | |
| EUR | 0.52% | 0.24% | 0.24% | 0.20% | 0.02% | 0.15% | -0.02% | |
| GBP | 0.32% | -0.24% | -0.02% | -0.03% | -0.21% | -0.10% | -0.21% | |
| JPY | 0.31% | -0.24% | 0.02% | -0.01% | -0.14% | -0.05% | -0.28% | |
| CAD | 0.31% | -0.20% | 0.03% | 0.00% | -0.15% | -0.05% | -0.16% | |
| AUD | 0.74% | -0.02% | 0.21% | 0.14% | 0.15% | 0.08% | 0.00% | |
| NZD | 0.40% | -0.15% | 0.10% | 0.05% | 0.05% | -0.08% | -0.11% | |
| CHF | 0.55% | 0.02% | 0.21% | 0.28% | 0.16% | -0.00% | 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).
EUR/USD came under bearish pressure in the American session on Tuesday after Bloomberg reported that the European Union (EU) was expecting a bulk of the tariffs imposed by the United States (US) to remain in place after little progress was made in talks on Monday.
The US Dollar (USD), however, came under renewed selling pressure and helped EUR/USD regain its traction after a Wall Street Journal report claimed that US President Donald Trump's administration was planning to use ongoing tariff negotiations to pressure US trading partner to limit their dealings with China.
In the second half of the day, the US Census Bureau will publish Retail Sales data for March. Markets expect an increase of 1.3% on a monthly basis. A stronger-than-forecast print could support the USD with the immediate reaction but the impact of this data on the currency's valuation is likely to remain short-lived.
Later in the American session, Federal Reserve Chairman Jerome Powell will speak on the economic outlook at the Economic Club of Chicago. According to the CME FedWatch Tool, markets are currently pricing in about a 20% probability of the Fed lowering the policy rate by 25 basis points at the next policy meeting. The market positioning suggests that the USD has some room left on the upside if Powell's remarks reaffirm a policy hold in May.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60 and EUR/USD remains above the 20-period Simple Moving Average (SMA), reflecting the bullish tilt in the short-term outlook.
EUR/USD could face first resistance at 1.1400 (static level, mid-point of the ascending channel) before 1.1470 (static level) and 1.1500 (round level). On the downside, first support could be spotted at 1.1340 (static level) ahead of 1.1300 (static level, round level) and 1.1250 (static level).
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.
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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.
