EUR/USD Forecast: Euro looks to consolidate weekly gains
- EUR/USD trades in a tight channel near 1.1800 early Wednesday.
- The pair is likely to remain calm heading into the Christmas holiday.
- The technical outlook suggests that the bullish bias remains intact.
EUR/USD closed the second consecutive day in positive territory on Tuesday and touched its highest level since late September above 1.1800 in the Asian session on Wednesday. The pair stays in a consolidation phase in the early European session as trading volumes thin out on Christmas Eve.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.58% | -0.93% | -1.20% | -0.83% | -1.55% | -1.78% | -0.87% | |
| EUR | 0.58% | -0.34% | -0.64% | -0.25% | -0.96% | -1.20% | -0.29% | |
| GBP | 0.93% | 0.34% | -0.21% | 0.09% | -0.63% | -0.87% | 0.05% | |
| JPY | 1.20% | 0.64% | 0.21% | 0.42% | -0.30% | -0.54% | 0.24% | |
| CAD | 0.83% | 0.25% | -0.09% | -0.42% | -0.65% | -0.95% | -0.04% | |
| AUD | 1.55% | 0.96% | 0.63% | 0.30% | 0.65% | 0.06% | 0.69% | |
| NZD | 1.78% | 1.20% | 0.87% | 0.54% | 0.95% | -0.06% | 0.93% | |
| CHF | 0.87% | 0.29% | -0.05% | -0.24% | 0.04% | -0.69% | -0.93% |
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 data published by the US Bureau of Economic Analysis (BEA) showed on Tuesday that the US' Gross Domestic Product (GDP) expanded at an annual rate of 4.3% in the third quarter. This print followed the 3.8% expansion recorded in the second quarter and came in much better than the market expectation of 3.3%.
Although the US Dollar (USD) managed to stage a rebound with the immediate reaction to the upbeat GDP data, it failed to gather momentum. US President Donald Trump's remarks about the Federal Reserve (Fed) seemingly made it difficult for the currency to attract buyers.
Trump said in a social media post on Tuesday that anybody who disagrees with him will never be the chairman for the Fed and added that he wants the new chairman to lower interest rates if the market is doing well.
The US Department of Labor will publish the weekly Initial Jobless Claims data on Wednesday, which is unlikely to ramp up EUR/USD's volatility. Financial markets in the US will open at the usual time but they will close early.
EUR/USD Technical Analysis:
The 20-period Simple Moving Average (SMA) rises above the 50-period, with the 50-, 100- and 200-period SMAs also trending higher, reinforcing a bullish alignment. Price holds above all key SMAs, preserving upward pressure, while the Relative Strength Index (14) advances to 63.6, pointing to firming bullish momentum without reaching overbought territory.
The rising trend line from 1.1500 underpins the bias, offering support near 1.1730, below the 1.1740-1.1750 area, where the 20-period SMA and the 50-period SMA align. Immediate resistance aligns at 1.1840 (upper limit of the ascending channel) ahead of 1.1880 (static level).
(The technical analysis of this story was written with the help of an AI tool)
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.
