EUR/USD Forecast: Euro fails to stabilize above key technical levels
- EUR/USD holds above 1.1600 following Monday's sharp decline.
- US President Trump threatened tariffs on countries that discriminate against US tech firms.
- The near-term technical outlook highlights a lack of buyer interest.
EUR/USD failed to build on previous Friday's gains and closed deep in negative territory on Monday. The pair struggles to hold its ground in the European session on Tuesday and trades above 1.1600.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.79% | 0.37% | 0.50% | 0.19% | 0.15% | 0.39% | 0.62% | |
| EUR | -0.79% | -0.43% | -0.36% | -0.60% | -0.58% | -0.41% | -0.17% | |
| GBP | -0.37% | 0.43% | -0.08% | -0.17% | -0.21% | 0.03% | 0.26% | |
| JPY | -0.50% | 0.36% | 0.08% | -0.25% | -0.32% | -0.04% | 0.24% | |
| CAD | -0.19% | 0.60% | 0.17% | 0.25% | -0.02% | 0.23% | 0.43% | |
| AUD | -0.15% | 0.58% | 0.21% | 0.32% | 0.02% | 0.24% | 0.47% | |
| NZD | -0.39% | 0.41% | -0.03% | 0.04% | -0.23% | -0.24% | 0.23% | |
| CHF | -0.62% | 0.17% | -0.26% | -0.24% | -0.43% | -0.47% | -0.23% |
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 risk-averse market atmosphere helped the US Dollar (USD) stay resilient against its peers on Monday. Although the currency came under pressure in the early Asian session on Tuesday after United States (US) President Donald Trump announced on Truth Social that he has fired Federal Reserve (Fed) Governor Lisa Cook, it managed to find support as Cook responded in a statement, noting that Trump has no authority to fire her and that she will carry out her duties.
Meanwhile, Trump renewed his threats of imposing tariffs on countries that discriminate against US technology firms, causing markets to turn risk-averse and weighing on the Euro. "Many countries, particularly in Europe, have levied taxes on the sales revenue of digital service providers, including Alphabet's Google, Meta's Facebook, Apple and Amazon," Reuters said when reporting on the matter. "The issue has been a longstanding trade irritant for multiple US administrations."
In the second half of the day, the US economic calendar will feature Durable Goods Orders data for July and the Conference Board will publish the Consumer Confidence Index data for August. Nevertheless, investors are likely to remain focused on political developments in the US.
In case investors grow increasingly concerned over the Fed's independence, with Trump reattempting to fire Fed Governor Cook, the USD could lose its footing and help EUR/USD stage a rebound. On the flip side, the pair's recovery attempts are likely to remain limited unless there is a noticeable improvement in market mood. At the time of press, US stock index futures were down about 0.2%.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart retreated below 50 and EUR/USD closed the last four 4-hour candles below 20-period, 50-period, 100-period and the 200-period Simple Moving Averages (SMAs), reflecting a bearish tilt in the near term outlook.
On the downside, 1.1600 (static level, round level) aligns as the first support level before 1.1540 (static level) and 1.1500 (static level, round level). Looking north, resistance levels could be spotted at 1.1630-1.1640 (100-period SMA, 200-period SMA), 1.1660 (50-period SMA) and 1.1720 (static level).
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.
