EUR/USD Forecast: Euro could meet next resistance at 1.0960
- EUR/USD advanced to fresh multi-month highs above 1.0900.
- The US Dollar stays under heavy selling pressure on Wednesday.
- European Central Bank will announce monetary policy decisions on Thursday.
EUR/USD gathered bullish momentum and climbed to its highest level since mid-March above 1.0900 in the European session on Wednesday. The pair could encounter next technical resistance at 1.0960.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.28% | -0.34% | -1.05% | 0.15% | 0.54% | 0.29% | -0.62% | |
| EUR | 0.28% | -0.03% | -0.58% | 0.63% | 0.87% | 0.76% | -0.15% | |
| GBP | 0.34% | 0.03% | -0.47% | 0.65% | 0.88% | 0.74% | -0.13% | |
| JPY | 1.05% | 0.58% | 0.47% | 1.21% | 1.38% | 1.32% | 0.24% | |
| CAD | -0.15% | -0.63% | -0.65% | -1.21% | 0.32% | 0.14% | -0.78% | |
| AUD | -0.54% | -0.87% | -0.88% | -1.38% | -0.32% | -0.09% | -1.00% | |
| NZD | -0.29% | -0.76% | -0.74% | -1.32% | -0.14% | 0.09% | -0.92% | |
| CHF | 0.62% | 0.15% | 0.13% | -0.24% | 0.78% | 1.00% | 0.92% |
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 broad-based selling pressure surrounding the US Dollar (USD) provides a boost to EUR/USD midweek. The sharp decline seen in the USD/JPY pair after Japanese Vice Finance Minister for International Affairs Masato Kanda said they have no choice but to respond appropriately if speculators cause excessive moves in the FX market, seems to be putting further weighing on the USD, which has been struggling to find demand with markets fully pricing in a Federal Reserve rate cut in September.
Meanwhile, the Eurostat announce on Wednesday that the annual increase in the Harmonized Index of Consumer Prices is confirmed at 2.5% in June.
The European Central Bank (ECB) will announce monetary policy decisions on Thursday. Hence, investors could refrain from betting on an extended Euro rally in the near term.
Additionally, US stock index futures trade deep in negative territory, pointing to a risk-averse market atmosphere. A bearish opening in Wall Street could help the USD find support in the second half of the day and limit the pair's upside.
EUR/USD Technical Analysis
The upper limit of the ascending regression channel coming from late June forms strong resistance at 1.0960. In the meantime, the Relative Strength Index (RSI) indicator on the 4-hour chart stays in overbought territory above 70.
On the downside, the mid-point of the ascending channel aligns as interim support at 1.0920 before 1.0900 (psychological level, static level) and 1.0860 (50-period Simple Moving Average). Above 1.0960, 1.1000 (psychological level, static level) could be seen as next resistance before 1.1030 (static level).
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.
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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.
