EUR/USD Forecast: Euro buyers hesitate ahead of mid-tier data
- EUR/USD fluctuates in a narrow channel above 1.1800 on Friday.
- The cautious market stance could limit the pair's upside in the near term.
- German inflation and US PPI data will be released later in the day.
EUR/USD keeps its footing early Friday and moves sideways in a tight band above 1.1800. While the technical outlook points to a mildly bullish bias in the short term, the cautious market mood caps the pair's upside.
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 | -0.09% | -0.04% | 0.78% | -0.00% | -0.42% | -0.07% | -0.20% | |
| EUR | 0.09% | 0.07% | 0.87% | 0.10% | -0.33% | 0.03% | -0.09% | |
| GBP | 0.04% | -0.07% | 0.97% | 0.03% | -0.44% | -0.04% | -0.15% | |
| JPY | -0.78% | -0.87% | -0.97% | -0.76% | -1.17% | -0.78% | -0.96% | |
| CAD | 0.00% | -0.10% | -0.03% | 0.76% | -0.42% | -0.02% | -0.18% | |
| AUD | 0.42% | 0.33% | 0.44% | 1.17% | 0.42% | 0.37% | 0.25% | |
| NZD | 0.07% | -0.03% | 0.04% | 0.78% | 0.02% | -0.37% | -0.11% | |
| CHF | 0.20% | 0.09% | 0.15% | 0.96% | 0.18% | -0.25% | 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 bearish action seen in Wall Street helped the US Dollar (USD) find demand and caused EUR/USD to close marginally lower on Thursday. After a two-day risk rally, the tech-heavy Nasdaq Composite reversed its direction and lost more than 1% on the day.
Later in the day, preliminary February Consumer Price Index (CPI) data from Germany will be watched closely. Analysts expect the annual CPI inflation to edge lower to 2% from 2.1% in January. A reading below the market forecast could weigh on the Euro and vice versa.
The US economic calendar will feature Producer Price Index (PPI) data for January. Investors are likely to ignore this report and stay focused on the action in US stock markets.
In the European session, US stock index futures are down between 0.1% and 0.4%. A selloff in tech stocks heading into the weekend could allow the USD to outperform its rivals, forcing EUR/USD to edge lower. Conversely, a recovery in the Nasdaq Composite could have the oppoite impact on the pair's action.
EUR/USD Technical Analysis:
The near-term bias is mildly bullish as the pair holds just above the 50-period Simple Moving Average (SMA) around 1.1800 while staying capped beneath the 100-period SMA near 1.1828, outlining a shallow upward tilt within a broader consolidation. The 20-period SMA has turned slightly higher and tracks close to spot, hinting at stabilizing short-term demand above the 200-period SMA at 1.1801, which underpins the downside. The Relative Strength Index (RSI) hovers near 57, showing moderate positive momentum without overbought conditions and supporting the view of a grinding upside rather than an impulsive breakout.
Immediate support emerges at the 1.1800 area, reinforced by the 50-period SMA and the 200-period SMA at 1.1801, with a deeper floor at the 61.8% Fibonacci retracement from the 1.1590 low to the 1.2027 high at 1.1757. A sustained break below 1.1757 would weaken the bullish bias and expose lower levels in the recent range. On the topside, initial resistance stands at the 50.0% retracement at 1.1809, which now lies just under the 100-period SMA at 1.1828, followed by a stronger barrier at the 38.2% retracement at 1.1860. A clear move through 1.1860 would open the way for an extension toward higher retracement levels and strengthen the nascent upward bias.
(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.
