EUR/USD Forecast: Euro could gather bullish momentum with break above 1.1270
- EUR/USD trades in positive territory above 1.1200 on Monday.
- Fed policymakers will be delivering speeches later in the day.
- The pair could face strong resistance at 1.1270.
EUR/USD gains traction and trades in positive territory above 1.1200 to begin the new week. The pair could face a strong resistance level at 1.1270.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.66% | -0.58% | -0.36% | -0.16% | -0.32% | -0.26% | -0.38% | |
| EUR | 0.66% | -0.17% | 0.15% | 0.33% | 0.23% | 0.23% | 0.06% | |
| GBP | 0.58% | 0.17% | -0.02% | 0.50% | 0.40% | 0.40% | 0.23% | |
| JPY | 0.36% | -0.15% | 0.02% | 0.22% | 0.20% | 0.30% | 0.04% | |
| CAD | 0.16% | -0.33% | -0.50% | -0.22% | -0.15% | -0.10% | -0.27% | |
| AUD | 0.32% | -0.23% | -0.40% | -0.20% | 0.15% | -0.00% | -0.16% | |
| NZD | 0.26% | -0.23% | -0.40% | -0.30% | 0.10% | 0.00% | -0.17% | |
| CHF | 0.38% | -0.06% | -0.23% | -0.04% | 0.27% | 0.16% | 0.17% |
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) following Moody's downgrade of the United States' credit rating helps EUR/USD push higher in the European morning on Monday. The USD Index, which tracks the USD's performance against a basket of six major currencies, was last seen losing 0.6% on the day below 100.50, pointing to a broad-based USD weakness.
Moody's announced late Friday that it downgraded the US' credit rating to 'AA1' from 'AAA', citing concerns about the growing $36 trillion debt pile. "Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," Moody's explained, per Reuters.
In the second half of the day, several Federal Reserve (Fed) policymakers will be delivering speeches.
Late last week, Atlanta Fed President Raphael Bostic said that he expects just one rate cuts this year amid uncertainty. In case Fed officials adopt a similar tone, the USD could stage a rebound and limit EUR/USD's upside. According to the CME FedWatch Tool, markets are currently pricing in about a 70% probability of the Fed cutting the policy rate at least twice this year.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart rises toward 60, reflecting a buildup of bullish momentum.
On the upside, 1.1270 (Fibonacci 38.2% retracement of the latest uptrend, 100-period Simple Moving Average (SMA), 200-period SMA) aligns as a key resistance level before 1.1300 (static level) and 1.1380 (Fibonacci 23.6% retracement).
Looking south, the first support level could be spotted at 1.1200 (static level, round level) ahead of 1.1170 (Fibonacci 50% retracement) and 1.1080 (Fibonacci 61.8% retracement).
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.
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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.
