EUR/USD Forecast: Euro holds above key support level on US recession fears
- EUR/USD trades in positive territory near 1.1000 in the European session.
- The US Dollar stays under persistent selling pressure on recession fears.
- The near-term technical outlook suggests that the bullish bias remains intact.
EUR/USD started the new week under bearish pressure after closing in negative territory on Friday. After dropping below 1.0900 in the Asian session, the pair regained its traction and climbed to the 1.1000 area.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.20% | 0.07% | 0.35% | -0.02% | 0.56% | 0.15% | -0.47% | |
| EUR | 0.20% | 0.56% | 1.20% | 0.81% | 0.69% | 0.99% | 0.35% | |
| GBP | -0.07% | -0.56% | -0.64% | 0.25% | 0.13% | 0.41% | -0.20% | |
| JPY | -0.35% | -1.20% | 0.64% | -0.34% | 1.18% | 1.06% | -0.47% | |
| CAD | 0.02% | -0.81% | -0.25% | 0.34% | 0.23% | 0.18% | -0.71% | |
| AUD | -0.56% | -0.69% | -0.13% | -1.18% | -0.23% | 0.29% | -0.33% | |
| NZD | -0.15% | -0.99% | -0.41% | -1.06% | -0.18% | -0.29% | -0.62% | |
| CHF | 0.47% | -0.35% | 0.20% | 0.47% | 0.71% | 0.33% | 0.62% |
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 (USD) staged a rebound heading into the weekend and caused EUR/USD to push lower on the back of upbeat employment data and hawkish comments from Federal Reserve (Fed) Chairman Jerome Powell.
The US Bureau of Labor Statistics reported that Nonfarm Payrolls rose by 228,000 in March, surpassing the market expectation of 135,000 by a wide margin. Commenting on the economic outlook, Powell said US President Donald Trump's tariffs are bigger than expected, and they risk higher inflation and slower growth. "The Fed's obligation is to make certain that a one-time increase in price levels doesn't become an ongoing inflation problem," he added.
US Commerce Secretary Howard Lutnick confirmed over the weekend that the tariffs will not be postponed and the policy will remain in place for days and weeks. Meanwhile, Stéphane Séjourné, the European Union (EU) Commissioner for prosperity and industrial strategy, said on Monday that they are planning to announce a list of products in response to US in coming days.
Markets grow increasingly concerned over the US trade policy causing the US economy to tip into a recession. In turn, investors expect the Fed to respond by lowering rates and forcing the USD to stay on the back foot. According to the CME FedWatch Tool, markets are currently pricing in an only 30% probability of the Fed leaving the policy rate unchanged in May, down from nearly 65% before the tariff announcement.
The economic calendar will not feature any high-tier data releases on Monday. Although the significant decline seen in US stock index futures point to a risk-averse market environment, investors could refrain from betting on a steady USD recovery in the near term.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 50 and EUR/USD staged a rebound after testing the 20-day Simple Moving Average (SMA), highlighting buyers' willingness to stay in control.
In case EUR/USD confirms 1.1000 (static level, round level) as support, 1.1050 (static level) could be seen as next resistance before 1.1100 (static level, round level). On the downside, supports are located at 1.0950 (static level), 1.0880 (20-day SMA) and 1.0860 (100-period SMA).
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.
