EUR/USD Forecast: Euro recovery attempts to remain limited in near term
- EUR/USD trades above 1.0300 in the European morning on Monday.
- US President Trump's tariff threats could limit the Euro's upside.
- ECB President Christine Lagarde will speak before the European Parliament later in the day.
EUR/USD holds steady above 1.0300 after starting the week under modest bearish pressure. The near-term technical outlook suggests that buyers remain hesitant.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | -0.07% | 0.49% | 0.41% | -0.01% | 0.05% | 0.13% | |
| EUR | -0.13% | -0.14% | 0.49% | 0.40% | -0.15% | 0.00% | 0.07% | |
| GBP | 0.07% | 0.14% | 0.45% | 0.50% | -0.01% | 0.14% | 0.21% | |
| JPY | -0.49% | -0.49% | -0.45% | -0.11% | -0.43% | -0.43% | -0.35% | |
| CAD | -0.41% | -0.40% | -0.50% | 0.11% | -0.40% | -0.39% | -0.32% | |
| AUD | 0.01% | 0.15% | 0.01% | 0.43% | 0.40% | 0.16% | 0.22% | |
| NZD | -0.05% | -0.01% | -0.14% | 0.43% | 0.39% | -0.16% | 0.07% | |
| CHF | -0.13% | -0.07% | -0.21% | 0.35% | 0.32% | -0.22% | -0.07% |
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).
January labor market data and US President Donald Trump's comments on trade policy helped the US Dollar (USD) gather strength heading into the weekend, causing EUR/USD to push lower late Friday.
The Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) rose by 143,000 in January, missing the market expectation for an increase of 170,000. On a positive note, November's increase of 256,000 were revised higher to 307,000, while the Unemployment Rate edged lower to 4.1% from 4% in December. In the meantime, US President Donald Trump said that he will announce "reciprocal tariffs" on many countries this Tuesday or Wednesday. Additionally, Trump announced over the weekend that he plans to impose 25% tariffs on all steel and aluminum imports into the US.
French Foreign Minister Jean-Noel Barrot responded to Trump early Monday, noting that France and its European partners should not hesitate to defend their interests in the face of the US tariff threats.
The economic calendar will not feature any high-tier data releases on Monday. Later in the day, European Central Bank (ECB) President Christine Lagarde will brief the European Parliament on the state of European and global economic affairs and the ECB’s activities.
The uncertainty surrounding EU-US trade relations could make it difficult for the Euro to find demand in the near term.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 40, highlighting the bearish stance. On the downside, 1.0290-1.0300 (Fibonacci 23.6% retracement of the latest downtrend, round level) aligns as first support area before 1.0250 (static level) and 1.0200 (round level, static level).
In case EUR/USD rises above 1.0350-1.0360 (Fibonacci 38.2% retracement, 200-period Simple Moving Average) and flips that area into support, technical buyers could take action. In this scenario, 1.0400 (Fibonacci 50% retracement) and 1.0440 (Fibonacci 61.8% retracement) could be seen as next resistance levels.
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.
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.
