EUR/USD Forecast: Euro buyers hesitate as mood sours
- EUR/USD trades in negative territory below 1.1550 on Monday.
- Safe-haven flows dominate financial markets as the Middle East crisis deepens.
- The technical outlook points to a lack of buyer interest.
EUR/USD struggles to hold its ground after opening with a bearish gap and trades in the red below 1.1550 on Monday. The risk-averse market atmosphere helps the US Dollar (USD) gather strength and makes it difficult for the pair to stage a rebound.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.18% | 0.10% | 0.07% | 0.65% | 0.50% | 0.14% | |
| EUR | -0.09% | 0.10% | 0.04% | -0.02% | 0.55% | 0.42% | 0.06% | |
| GBP | -0.18% | -0.10% | -0.11% | -0.12% | 0.47% | 0.31% | -0.11% | |
| JPY | -0.10% | -0.04% | 0.11% | -0.09% | 0.52% | 0.34% | -0.08% | |
| CAD | -0.07% | 0.02% | 0.12% | 0.09% | 0.61% | 0.44% | 0.07% | |
| AUD | -0.65% | -0.55% | -0.47% | -0.52% | -0.61% | -0.15% | -0.58% | |
| NZD | -0.50% | -0.42% | -0.31% | -0.34% | -0.44% | 0.15% | -0.42% | |
| CHF | -0.14% | -0.06% | 0.11% | 0.08% | -0.07% | 0.58% | 0.42% |
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 gained more than 1% in the previous week as the European Central Bank's (ECB) hawkish tone helped the Euro find demand.
Early Monday, escalating tensions in the Middle East triggered an intense flight-to-safety and supported the USD.
Over the weekend, United States (US) President Donald Trump delivered an ultimatum to Iran, saying that they will “obliterate” Iran’s power plants if they refuse to open the Strait of Hormuz within 48 hours.
In response, Iran said that they will retaliate and target all US-linked energy infrastructure in the Middle East if the US attacks its power plants. Additionally, Iran’s Revolutionary Guards said that the Strait of Hormuz will be completely closed if the US carries on with its threats.
Reflecting the negative shift seen in risk sentiment, US stock index futures lose between 0.9% and 1.2% in the European morning on Monday. In case the selloff in US stocks gathers momentum after the opening bell, the USD could preserve its strength and weigh on EUR/USD. On Tuesday, preliminary March Manufacturing and Services Purchasing Managers' Index (PMI) data from Germany, the Eurozone and the US will be watched closely, as they could provide key insights into the impact of rising Oil prices on the private sector's input inflation.
EUR/USD Technical Analysis:
In the 4-hours chart, EUR/USD trades at 1.1532. The technical outlook points to a loss of bullish momentum as the Relative Strength Index (RSI) indicator declines toward 50, while the pair tests the 20-period and the 50-period Simple Moving Averages, located in the 1.1530-1.1520 region. The broader setup remains capped by the descending 100- and 200-period SMAs clustered well above the market, which limits trend extension and frames the advance as corrective within a broader downside context. Bollinger Bands are relatively flat with price sitting close to the middle band, indicating contained volatility.
In case the pair drops below the 1.1530-1.1520 area, 1.1500 (static level, round level) could be seen as the next support before 1.1460-1.1450, where the lower Bollinger Band coinscides with a static level. On the topside, initial resistance area emerges at 1.1590-1.1610 (100-period SMA, upper Bollinger Band) ahead of 1.1670 (static level).
(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.
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.
