EUR/USD Forecast: Euro clings to neutral stance ahead of US data
- EUR/USD continues to move sideways above 1.1500 for the second consecutive day.
- The cautious market stance limits the pair's upside early Tuesday.
- The US economic calendar will feature mid-tier data releases.
EUR/USD failed to make a decisive move in either direction at the beginning of the week and closed flat on Monday. The pair remains stuck in a tight channel above 1.1500 early Tuesday as market attention shifts to macroeconomic data releases from the US.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.09% | 0.00% | 0.14% | 0.08% | 0.29% | 0.05% | |
| EUR | 0.09% | -0.02% | 0.09% | 0.22% | 0.14% | 0.36% | 0.13% | |
| GBP | 0.09% | 0.02% | 0.08% | 0.26% | 0.16% | 0.38% | 0.14% | |
| JPY | 0.00% | -0.09% | -0.08% | 0.13% | 0.02% | 0.15% | 0.06% | |
| CAD | -0.14% | -0.22% | -0.26% | -0.13% | -0.06% | 0.15% | -0.08% | |
| AUD | -0.08% | -0.14% | -0.16% | -0.02% | 0.06% | 0.23% | 0.00% | |
| NZD | -0.29% | -0.36% | -0.38% | -0.15% | -0.15% | -0.23% | -0.22% | |
| CHF | -0.05% | -0.13% | -0.14% | -0.06% | 0.08% | -0.01% | 0.22% |
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).
Dovish comments from Federal Reserve (Fed) officials continued to ramp up the probability of a rate cut in December and made it difficult for the US Dollar (USD) to gather strength on Monday. Fed Governor Christopher Waller told Fox Business that he is in favor of a rate cut at the next meeting, arguing that inflation is going to start to come down after the last tick up. Similarly, San Francisco Fed President Mary Daly said that the Fed shouldn't hold off on cutting rates out of fear that it may need to reverse course later.
Although the USD struggles to attract demand, the risk-averse market atmosphere caps EUR/USD's upside in the European morning on Tuesday. At the time of press, US stock index futures were down about 0.2% on the day.
In the second half of the day, Retail Sales and Producer Price Index (PPI) data for September will be featured in the US economic calendar. Investors could ignore these figures since they will not offer any insights into the current economic conditions. Additionally, the Conference Board will publish the November Consumer Confidence Index report and the Automatic Data Processing (ADP) will release the weekly private sector employment data.
A negative print in the ADP data could reaffirm worsening conditions in the labor market and weigh on the USD by feeding into Fed rate cut expectations. According to the CME FedWatch Tool, markets are currently pricing in about a 20% probability of a policy hold in December. This positioning suggests that the USD has more room on the downside.
EUR/USD Technical Analysis:
The 20-period Simple Moving Average (SMA) extends lower and sits just below the price, while EUR/USD remains beneath the 50-, 100-, and 200-period SMAs, maintaining a bearish bias. The longer SMAs continue to decline, reinforcing seller control. The Relative Strength Index (RSI) prints 46, recovering from oversold readings in the previous week but still staying below the 50 midline.
Measured from the 1.1888 high to the 1.1471 low, the 23.6% retracement at 1.1569 aligns as the first resistance level ahead of 1.1585 (200-period SMA) and the 38.2% retracement at 1.1630. Overall momentum remains muted, and bulls would need a break through these resistance levels to shift the tone. Looking south, supports could be seen at 1.1451 (static level) and 1.1400 (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.
