EUR/USD Forecast: Euro remains stuck between key technical levels
- EUR/USD moves sideways near 1.1350 in the European session on Monday.
- The near-term technical outlook highlights a lack of buyer interest.
- The pair's action could remain subdued ahead of this week's key data releases.
EUR/USD struggles to find direction and fluctuates in a narrow channel at around 1.1350 after posting small losses in the previous week. The pair's technical outlook points to a lack of buyer interest but doesn't signal a buildup of bearish momentum.
Euro PRICE Last 7 days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.44% | -0.10% | 1.03% | 0.28% | 0.12% | -0.12% | 1.77% | |
| EUR | -0.44% | -0.69% | 0.59% | -0.20% | -0.49% | -0.58% | 1.30% | |
| GBP | 0.10% | 0.69% | 1.45% | 0.50% | 0.20% | 0.10% | 2.00% | |
| JPY | -1.03% | -0.59% | -1.45% | -0.77% | -1.04% | -1.04% | 0.74% | |
| CAD | -0.28% | 0.20% | -0.50% | 0.77% | -0.27% | -0.39% | 1.51% | |
| AUD | -0.12% | 0.49% | -0.20% | 1.04% | 0.27% | -0.08% | 1.81% | |
| NZD | 0.12% | 0.58% | -0.10% | 1.04% | 0.39% | 0.08% | 1.92% | |
| CHF | -1.77% | -1.30% | -2.00% | -0.74% | -1.51% | -1.81% | -1.92% |
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 US Dollar (USD) held resilient against its rivals last week and caused EUR/USD to stretch lower amid growing optimism about a de-escalation of the US-China trade conflict. In the absence of new developments, markets adopt a cautious tone early Monday and help the pair find support.
A spokesperson for China's Foreign Ministry said on Monday that they have not engaged in any trade talks with the US.
In the meantime, European Central Bank (ECB) policymaker Francois Villeroy de Galhau said on Monday that the central bank still has a margin for rate cuts in Europe.
The US economic calendar will not feature any high-tier data releases. Later in the week, Gross Domestic Product from the Eurozone, Germany and the US will be watched closely by market participants. The US Bureau of Labor Statistics will release April employment data on Friday as well.
Investors could refrain from taking large positions ahead of these key data releases. Nevertheless, the USD could gather strength in case markets receive news suggesting that the US and China are working toward a trade deal.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays flat slightly below 50, reflecting the pair's indecisiveness.
On the downside, 1.1270, where the 100-period Simple Moving Average (SMA) and the Fibonacci 38.2% retracement of the latest uptrend meet, aligns as a key support level before 1.1180 (Fibonacci 50% retracement). Looking north, resistances could be spotted at 1.1390-1.1400 (Fibonacci 23.6% retracement, 50-period SMA), 1.1450 (static level) and 1.1500 (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.
