EUR/USD Forecast: Euro looks to stay bullish while 1.1650-1.1660 holds
- EUR/USD holds steady above 1.1650 following Wednesday's rally.
- Technical buyers could remain interested in Euro while 1.1650-1.1660 support holds.
- The US economic calendar will feature weekly Jobless Claims data.
Following the sideways action seen earlier in the week, EUR/USD gathered bullish momentum and registered strong daily gains on Wednesday. After touching its highest level since July 28 near 1.1700, the pair seems to have entered a consolidation phase above 1.1650 in the European session on Thursday.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.66% | -0.65% | 0.07% | -0.33% | -0.72% | -0.71% | 0.11% | |
| EUR | 0.66% | 0.05% | 0.74% | 0.33% | -0.21% | -0.06% | 0.76% | |
| GBP | 0.65% | -0.05% | 0.73% | 0.28% | -0.26% | -0.11% | 0.71% | |
| JPY | -0.07% | -0.74% | -0.73% | -0.42% | -0.94% | -0.79% | 0.19% | |
| CAD | 0.33% | -0.33% | -0.28% | 0.42% | -0.55% | -0.38% | 0.43% | |
| AUD | 0.72% | 0.21% | 0.26% | 0.94% | 0.55% | 0.15% | 0.97% | |
| NZD | 0.71% | 0.06% | 0.11% | 0.79% | 0.38% | -0.15% | 0.81% | |
| CHF | -0.11% | -0.76% | -0.71% | -0.19% | -0.43% | -0.97% | -0.81% |
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).
Renewed concerns over a downturn in the US economy caused the US Dollar (USD) to weaken against its rivals as US President Donald Trump announced new tariffs and delivered threats.
Trump issued an executive order imposing an additional 25% tariff on Indian imports on Wednesday, citing India's direct or indirect imports of Russian oil, and added that he could impose an extra 25% tariff on Chinese goods over China's purchases of Russian oil. Moreover, he said that they are planning to impose a 100% tariff on semiconductors and chips that are not being manufactured in the US.
The US Department of Labor will release the weekly Initial Jobless Claims data on Thursday. Markets expect the number of first-time applications for unemployment benefits to rise to 221,000 from 218,000 in the previous week. A reading below 210,000 could support the USD with the immediate reaction and cause EUR/USD to correct lower. On the other hand, a noticeable increase, with a print above 230,000, could have the opposite impact on the pair's action.
Meanwhile, market participants will continue to pay close attention to trade-related news. A further escalation of the US-China tensions could make it difficult for the USD to attract buyers.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart retreated below 70, suggesting that the current pullback is a technical correction.
The 200-period Simple Moving Average (SMA) and the Fibonacci 23.6% retracement of the latest uptrend form a strong support area at 1.1650-1.1660. In case EUR/USD fails to stabilize above this region, technical buyers could hesitate. In this scenario, 1.1620 (100-period SMA) could be seen as the next support before 1.1540-1.1550 (Fibonacci 38.2% retracement, 50-period SMA) and 1.1500 (static level, round level).
On the upside, 1.1700 (static level, round level) could be seen as the immediate resistance level before 1.1760 (static level) and 1.1800 (static level, round 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.
