EUR/USD Forecast: Euro bulls show no interest to start holiday week
- EUR/USD moves sideways in a tight range above 1.1700.
- The technical outlook points to a lack of buyer interest in the short term.
- The pair could stay on the back foot in case markets remain risk-averse.
EUR/USD registered losses for four consecutive days and closed the previous week in negative territory. The pair holds steady above 1.1700 in the European morning on Monday but the near-term technical outlook highlights a lack of buyer interest.
Euro Price Last 7 Days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | -0.24% | 1.01% | 0.12% | 0.14% | 0.36% | -0.18% | |
| EUR | -0.14% | -0.37% | 0.85% | -0.03% | 0.03% | 0.22% | -0.32% | |
| GBP | 0.24% | 0.37% | 1.33% | 0.35% | 0.40% | 0.59% | 0.05% | |
| JPY | -1.01% | -0.85% | -1.33% | -0.87% | -0.84% | -0.65% | -0.95% | |
| CAD | -0.12% | 0.03% | -0.35% | 0.87% | 0.04% | 0.24% | -0.15% | |
| AUD | -0.14% | -0.03% | -0.40% | 0.84% | -0.04% | 0.19% | -0.34% | |
| NZD | -0.36% | -0.22% | -0.59% | 0.65% | -0.24% | -0.19% | -0.53% | |
| CHF | 0.18% | 0.32% | -0.05% | 0.95% | 0.15% | 0.34% | 0.53% |
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 US Dollar (USD) staged a rebound in the second half of the previous week as the softer-than-expected inflation data for November failed to alter the market expectation of the Federal Reserve's (Fed) rate decision in January. According to the CME FedWatch Tool, markets are currently pricing in about a 22% probability of a 25 basis-points (bps) rate cut in January, virtually unchanged from a week ago.
The economic calendar will not offer any high-impact data releases on Monday. Hence, investors will pay close attention to the risk perception.
Markets seem to have adopted a cautious stance on reports of Israel planning to attack Iran again. Citing four former US officials familiar with the matter, NBC News reported that Israeli Prime Minister Benjamin Netanyahu is expected to meet US President Donald Trump later this month to explain the need to take military action against Iran on growing concerns about Iran reconstituting nuclear enrichment sites and expanding its ballistic missile program.
In case safe-haven flows dominate the action in financial markets in the second half of the day, the USD could gather strength and cause EUR/USD to stretch lower. On Tuesday, the US Bureau of Economic Analysis will publish the Gross Domestic Product (GDP) data for the third quarter.
EUR/USD Technical Analysis:
The 20-period Simple Moving Average (SMA) at 1.1724 has turned lower and caps the upside, while the 50-period SMA continues to rise and converges just above price. The pair trades below the 20 and 50 SMAs but remains above the ascending 100- and 200-period SMAs, indicating a range-bound bias. The Relative Strength Index (RSI) at 47.10 is neutral to soft, reiterating a lack of buyer interest.
The rising trend line from 1.1500 and the lower limit of the ascending channel form the first support level at 1.1710 before 1.1675 (100-period SMA) and 1.1620 (200-period SMA). On the upside, immediate resistance aligns at 1.1770 (mid-point of the ascending channel), followed by 1.1820 (upper limit of the ascending channel).
(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.
