EUR/USD Forecast: Euro holds firm as risk appetite supports, USD weakness persists

EUR/USD holds near 1.1610 at the time of writing on Tuesday, remaining broadly steady on the day. The pair has preserved the gains recorded earlier this week, supported by easing risk aversion despite mixed signals from the Eurozone. Investors continue to digest the acceleration in Eurozone inflation and the higher-than-expected Unemployment Rate, though neither development appears likely to shift the European Central Bank (ECB) away from its current stance of maintaining rates unchanged in the coming months.

In the United States (US), the US Dollar Index (DXY) is attempting to stabilize after a hesitant performance on Monday. The improvement in overall risk appetite has partly offset the negative impact from another soft reading in the manufacturing sector, highlighted by the Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) for November, which fell to 48.2 and signaled a deeper contraction in activity.

Market expectations regarding the Federal Reserve (Fed) remain tilted toward additional monetary easing in December, following recent comments from several officials indicating that another rate cut is a plausible scenario.

In the background, markets are also monitoring developments in Japan, after remarks from Bank of Japan (BoJ) Governor Kazuo Ueda briefly revived concerns of a potential rate hike, triggering a global sell-off in Bond markets and pushing US Treasury yields higher. However, an improvement in sentiment on Tuesday, supported by a well-received Japanese government Bond auction, has helped EUR/USD maintain its stability.

The remainder of the week will be decisive for the EUR/USD, starting with the Eurozone Services PMI, ISM Services PMI and the ADP private-sector employment report in the US, all scheduled for release on Wednesday.

EUR/USD Technical Analysis

In the 4-hour chart, EUR/USD trades at 1.1615, 3 pips above the day opening price. The 100-period Simple Moving Average (SMA) edges higher and sits below price, suggesting buyers retain control. Price holds above this rising SMA, which offers dynamic support near 1.1577. The Relative Strength Index (RSI) at 58.7 is neutral-to-bullish, indicating steady momentum. The rising trend line from 1.1491 underpins the bias, with support aligned around 1.1593.

Immediate resistance aligns at 1.1656, followed by 1.1669. Support is seen at the rising trend line near 1.1593, then at 1.1491. A sustained break above 1.1656 would open a path toward 1.1669, while a drop through 1.1593 could shift the tone and expose 1.1491.

(The technical analysis of this story was written with the help of an AI tool)