EUR/USD Forecast: Euro buyers show interest as risk flows return
- EUR/USD clings to marginal gains near 1.1650 on Tuesday.
- Improving risk mood makes it difficult for the USD to preserve its strength.
- Markets will remain focused on geopolitical headlines in the absence of data releases.
Following a bearish opening to the week, EUR/USD reversed its direction in the second half of the day on Monday to end marginally higher. The pair holds its ground early Tuesday and trades in positive territory at around 1.1650.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.93% | -0.95% | -0.35% | -0.17% | -1.70% | -1.11% | -0.50% | |
| EUR | 0.93% | -0.04% | 0.57% | 0.76% | -0.79% | -0.20% | 0.41% | |
| GBP | 0.95% | 0.04% | 0.66% | 0.79% | -0.76% | -0.16% | 0.45% | |
| JPY | 0.35% | -0.57% | -0.66% | 0.19% | -1.35% | -0.75% | -0.15% | |
| CAD | 0.17% | -0.76% | -0.79% | -0.19% | -1.55% | -0.94% | -0.34% | |
| AUD | 1.70% | 0.79% | 0.76% | 1.35% | 1.55% | 0.60% | 1.22% | |
| NZD | 1.11% | 0.20% | 0.16% | 0.75% | 0.94% | -0.60% | 0.61% | |
| CHF | 0.50% | -0.41% | -0.45% | 0.15% | 0.34% | -1.22% | -0.61% |
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 sharp correction seen in Oil prices on hopes of G7 members releasing reserves to stabilise markets allowed investors to breathe a sigh of relief. Additionally, US President Donald Trump hinted that the military operation against Iran could end soon, saying that "the war is very complete, pretty much."
After Wall Street's main indexes registered gains on Monday, US stock index futures rise between 0.3% and 0.5% in the European session on Tuesday, suggesting that markets remain risk-positive.
G7 energy ministers will reportedly hold a virtual meeting to discuss a possible release of Oil reserves later in the day. In case this is confirmed, the market mood could improve further and allow EUR/USD to extend its recovery. Conversely, another leg higher in Oil prices, with a further reescalation of the conflict in the Middle East and G7 members failing to come to an agreement, could have the opposite impact on the pair's action.
The economic calendar will not feature any high-tier data releases on Tuesday. On Wednesday, the US Bureau of Labor Statistics will publish the Consumer Price Index (CPI) data for February.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1653. The near-term bias is mildly bullish as the pair rebounds from the 1.1570 support area and pushes above the 20-period Moving Average (MA) near 1.1600, with price also reclaiming ground above the lower Bollinger Band after earlier downside pressure. The 50- and 100-period MAs slope lower and remain above spot, framing the move as a corrective bounce within a broader downbeat context, but the latest Relative Strength Index (RSI) recovery from oversold territory toward the mid-50s shows improving momentum on this timeframe. Price now trades between the middle and upper Bollinger Bands, indicating stabilizing volatility after the recent slide.
Immediate resistance emerges at 1.1670, aligned with the nearby 50-period MA overhead, and a sustained break above this level would open the door toward the 100-period SMA at 1.1735. On the downside, initial support stands at 1.1570 (static level). A drop below this level would neutralize the current recovery attempt.
(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.
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