EUR/USD Forecast: Euro remains fragile on souring risk mood
- EUR/USD holds steady at around 1.1600 in the European session on Tuesday.
- The pair could struggle to gain traction in case safe-haven flows dominate markets.
- The US economic calendar will feature weekly private sector employment data.
EUR/USD started the week under bearish pressure and closed in negative territory on Monday. The pair stays in a consolidation phase at around 1.1600 in the European morning on Tuesday, as the souring risk mood helps the US Dollar (USD) hold its ground.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.22% | 0.04% | 0.33% | 0.21% | 0.93% | 0.48% | -0.01% | |
| EUR | -0.22% | -0.07% | 0.49% | 0.01% | 0.71% | 0.28% | -0.21% | |
| GBP | -0.04% | 0.07% | 0.31% | 0.08% | 0.78% | 0.35% | -0.14% | |
| JPY | -0.33% | -0.49% | -0.31% | -0.09% | 0.62% | 0.16% | -0.35% | |
| CAD | -0.21% | -0.01% | -0.08% | 0.09% | 0.72% | 0.25% | -0.22% | |
| AUD | -0.93% | -0.71% | -0.78% | -0.62% | -0.72% | -0.42% | -0.90% | |
| NZD | -0.48% | -0.28% | -0.35% | -0.16% | -0.25% | 0.42% | -0.49% | |
| CHF | 0.01% | 0.21% | 0.14% | 0.35% | 0.22% | 0.90% | 0.49% |
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).
Growing expectations for a Federal Reserve (Fed) policy hold in December continued to support the USD, while weighing on risk-sensitive assets. Following a bearish opening, Wall Street's main indexes registered large losses and the USD Index rose about 0.3% on Monday.
As of writing, US stock index futures were down between 0.5% and 1%. An extended decline in US stocks following the opening bell could make it difficult for EUR/USD to stage a rebound in the second half of the day.
The US economic calendar will feature the Automatic Data Processing's (ADP) weekly Employment Change data.
The ADP reported last week that private employers shed an average of 11,250 jobs a week for the four weeks ending October 25. Another negative print could revive concerns over worsening conditions in the labor market and limit the USD's gains. Conversely, a noticeable rebound could support the USD with the immediate reaction. In this scenario, the market mood could improve as well, helping US stocks rebound and EUR/USD find a foothold later in the American session.
EUR/USD Technical Analysis
The 20-period Simple Moving Average (SMA) advances above the 50 and 100 SMAs, yet the pair holds beneath the 20 and the gently falling 200 SMA, reflecting a mixed near-term bias. The 200-period SMA aligns as a pivot level slightly, above 1.1600.
The 50- and 100-period SMAs rise below price and offer underlying support. The Relative Strength Index (RSI) stands near 49.5 and is edging higher, pointing to stabilizing momentum.
Measured from the 1.1885 high to the 1.1470 low, the 38.2% retracement at 1.1628 aligns as the immediate resistance level. A break above this hurdle could open the path toward the 50% retracement at 1.1678. Static support levels are seen at 1.1567 (Fibonacci 23.6% retracement) then at 1.1451.
(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.
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.
