EUR/USD Forecast: Euro bulls show signs of life
- EUR/USD stabilizes above 1.1800 after posting gains on Wednesday.
- The cautious market mood could limit the pair's upside in the near term.
- The technical outlook points to a bullish tilt.
EUR/USD gained about 0.3% on Wednesday and snapped a two-day losing streak. The pair stays relatively quiet early Thursday and moves above 1.1800.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.13% | -0.40% | 0.70% | -0.08% | -0.54% | -0.25% | -0.34% | |
| EUR | 0.13% | -0.25% | 0.83% | 0.06% | -0.42% | -0.12% | -0.19% | |
| GBP | 0.40% | 0.25% | 1.27% | 0.31% | -0.20% | 0.14% | 0.08% | |
| JPY | -0.70% | -0.83% | -1.27% | -0.77% | -1.22% | -0.89% | -1.03% | |
| CAD | 0.08% | -0.06% | -0.31% | 0.77% | -0.46% | -0.12% | -0.25% | |
| AUD | 0.54% | 0.42% | 0.20% | 1.22% | 0.46% | 0.31% | 0.24% | |
| NZD | 0.25% | 0.12% | -0.14% | 0.89% | 0.12% | -0.31% | -0.07% | |
| CHF | 0.34% | 0.19% | -0.08% | 1.03% | 0.25% | -0.24% | 0.07% |
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 risk-positive market atmosphere caused the US Dollar (USD) to lose interest midweek, allowing EUR/USD to edge higher.
Ahead of the next round of US-Iran nuclear talks in Geneva, markets adopt a cautious stance early Thursday and help the USD limit its losses. At the time of press, US stock index futures were down about 0.2% on the day.
Later in the session, European Central Bank (ECB) President Christine Lagarde will testify before European Parliament. In case Lagarde warns that further Euro strength could heighten the risks of inflation falling below target, EUR/USD could come under renewed bearish pressure.
In the second half of the day, the US Department of Labor will publish the weekly Initial Jobless Claims data. Nevertheless, market participants will keep a close eye on headlines coming out of US-Iran talks. If there is an agreement, risk flows could dominate the action in financial markets and hurt the USD. On the flip side, safe-haven flows could return in case sides fail to make a deal, reviving fears over a military conflict between the US and Iran.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1813. The near-term bias is mildly bullish as the pair holds above the 20- and 50-period Simple Moving Averages (SMAs) while challenging the 100-period SMA near 1.1828, signalling buyers are gradually regaining control above the 200-period SMA around 1.1796. The Relative Strength Index (RSI) hovers in the mid-50s, confirming improving upside momentum rather than overbought conditions. Price action also presses against a descending resistance trend line that was broken around 1.1819, with the current consolidation just above that break area reinforcing a tentative upside tilt.
Immediate support emerges at 1.1809, aligned with the 50.0% Fibonacci retracement measured from the 1.1590 low to the 1.2027 high, followed by 1.1757 at the 61.8% retracement, where the 200-period SMA provides an additional cushion nearby. A sustained hold above these levels would keep attention on initial resistance at the 100-period SMA near 1.1828, with the 38.2% retracement at 1.1860 as the next upside barrier. A clear break above 1.1860 would open the way toward the 23.6% retracement at 1.1924, while a drop back below 1.1757 would undermine the nascent bullish setup and shift the focus toward the broader range lows.
(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.
