EUR/USD Forecast: Euro buyers show interest to start week
- EUR/USD trades in positive territory above 1.1850 in the European session on Monday.
- The US Dollar (USD) starts the week under bearish pressure.
- The technical outlook highlights a buildup of bullish momentum in the short term.
After closing the previous week in negative territory, EUR/USD gains traction on Monday and trades above 1.1850. In the second half of the day, investors will pay close attention to comments from central bankers.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.33% | 0.14% | -0.25% | -0.09% | -0.26% | 0.12% | -0.32% | |
| EUR | 0.33% | 0.47% | 0.06% | 0.25% | 0.07% | 0.45% | 0.00% | |
| GBP | -0.14% | -0.47% | -0.40% | -0.24% | -0.40% | -0.02% | -0.46% | |
| JPY | 0.25% | -0.06% | 0.40% | 0.16% | -0.01% | 0.37% | -0.08% | |
| CAD | 0.09% | -0.25% | 0.24% | -0.16% | -0.17% | 0.21% | -0.24% | |
| AUD | 0.26% | -0.07% | 0.40% | 0.00% | 0.17% | 0.38% | -0.06% | |
| NZD | -0.12% | -0.45% | 0.02% | -0.37% | -0.21% | -0.38% | -0.45% | |
| CHF | 0.32% | -0.00% | 0.46% | 0.08% | 0.24% | 0.06% | 0.45% |
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 selling pressure surrounding the US Dollar (USD) seems to be helping EUR/USD edge higher at the beginning of the week. The positive shift seen in risk mood and the sharp decline in the USD/JPY pair following the verbal intervention by Japanese officials to offset the JPY weakness on the election outcome cause the USD to lose interest. At the time of press, the USD Index was down 0.3% on the day at 97.35.
Later in the day, European Central Bank (ECB) President Christine Lagarde will speak on the state of the EU economy and ECB activities in an event in France. In the American session, several policymakers from the Federal Reserve (Fed) will be delivering speeches.
The CME FedWatch Tool currently shows that markets are pricing in about a 16% probability of a 25 basis points (bps) rate cut next month. In case officials reiterate that they are willing to remain patient and watch the data before deciding on the next policy move, the USD could find a foothold and limit EUR/USD's upside.
Nevertheless, investors could refrain from betting on a steady recoveryin the USD ahead of the critical Nonfarm Payrolls data for January, which is scheduled to be released on Friday.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1858. The 20-period Simple Moving Average (SMA) has turned higher but remains below the 50-period SMA, which slopes gently lower. The 100- and 200-period SMAs trend upward, hinting at a firmer medium-term bias. The 14-period RSI at 61.8 rises above the midline, underscoring building bullish momentum.
Measured from the 1.1590 low to the 1.2025 high, the 38.2% retracement at 1.1860 aligns as a pivot point. If this level stays intact and EUR/USD failes to stabilize above it, the 50% retracement and the 100-period SMA in the 1.1810-1.1800 could act as the next support. On the upside, 1.1900 (static level) could be seen as an interim resistance level ahead of 1.1925 (Fibonacci 23.6% retracement).
(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.
