EUR/USD Forecast: Euro closes in on key support level
- EUR/USD stays under bearish pressure after snapping a three-day winning streak on Wednesday.
- The pair could push lower if 1.0830 support fails.
- The Federal Reserve left the policy rate unchanged at 4.25%-4.5% as expected.
EUR/USD struggles to find a foothold and declines toward 1.0850 in the European session on Thursday, after snapping a three-day winning streak on Wednesday. The pair's technical outlook points to a bearish tilt in the near term.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.52% | 0.41% | -0.06% | 0.31% | 0.94% | 1.19% | 0.44% | |
| EUR | -0.52% | -0.12% | -0.56% | -0.22% | 0.41% | 0.66% | -0.08% | |
| GBP | -0.41% | 0.12% | -0.46% | -0.11% | 0.53% | 0.79% | 0.04% | |
| JPY | 0.06% | 0.56% | 0.46% | 0.35% | 0.99% | 1.22% | 0.57% | |
| CAD | -0.31% | 0.22% | 0.11% | -0.35% | 0.64% | 0.88% | 0.14% | |
| AUD | -0.94% | -0.41% | -0.53% | -0.99% | -0.64% | 0.24% | -0.49% | |
| NZD | -1.19% | -0.66% | -0.79% | -1.22% | -0.88% | -0.24% | -0.76% | |
| CHF | -0.44% | 0.08% | -0.04% | -0.57% | -0.14% | 0.49% | 0.76% |
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 US Dollar gathers strength and weighs on EUR/USD as markets digest the Federal Reserve's (Fed) monetary policy announcements.
Following the March policy meeting, the Fed decided to keep the interest rate unchanged at 4.25%-4.5%, as widely anticipated. The revised Summary of Economic Projections (SEP), also known as the dot plot, showed that policymakers were still projecting a 50 basis points (bps) cut in rates in 2025.
While speaking on the policy outlook, Fed Chairman Jerome Powell reiterated that they will not be in a hurry to move on rate cuts and added that they can maintain policy restraint for longer if the economy remains strong. The US Dollar (USD) held its ground following these comments and started to outperform its rivals on Thursday.
Later in the session, the US Department of Labor will publish the weekly Initial Jobless Claims data. A significant increase in this data could limit the USD's gains and help EUR/USD find support.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly below 40 and EUR/USD trades near 1.0830, where the lower limit of the ascending regression channel is located. In case this support fails, technical sellers could take action and open the door for an extended declined toward 1.0730 (200-day Simple Moving Average (SMA), static level) and 1.0700 (static level, round level).
Looking north, resistances could be seen at 1.0900 (static level, round level), 1.0950 (static level) and 1.1000 (mid-point of the ascending channel).
Euro FAQs
The Euro is the currency for the 19 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.
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
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.
