EUR/USD Forecast: Euro sellers could hesitate while 1.1700 holds
- EUR/USD clings to small gains, trades above 1.1700 early Monday.
- The US Dollar struggles to find demand on growing fears over a government shutdown.
- The near-term technical outlook points to a loss of bearish momentum.
EUR/USD holds its ground and clings to modest gains above 1.1700 early Monday after closing the previous week in negative territory.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.18% | -0.31% | -0.64% | -0.12% | -0.30% | -0.05% | -0.21% | |
| EUR | 0.18% | -0.14% | -0.61% | 0.06% | -0.12% | 0.12% | -0.04% | |
| GBP | 0.31% | 0.14% | -0.38% | 0.19% | -0.05% | 0.25% | 0.09% | |
| JPY | 0.64% | 0.61% | 0.38% | 0.57% | 0.38% | 0.47% | 0.48% | |
| CAD | 0.12% | -0.06% | -0.19% | -0.57% | -0.15% | 0.06% | -0.10% | |
| AUD | 0.30% | 0.12% | 0.05% | -0.38% | 0.15% | 0.24% | 0.07% | |
| NZD | 0.05% | -0.12% | -0.25% | -0.47% | -0.06% | -0.24% | -0.02% | |
| CHF | 0.21% | 0.04% | -0.09% | -0.48% | 0.10% | -0.07% | 0.02% |
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 renewed selling pressure surrounding the US Dollar (USD) helps EUR/USD gain traction in the European morning as investors grow increasingly concerned over a government shutdown in the US.
United States (US) President Donald Trump will meet with top congressional leaders from both parties later in the day to enact the funding legislation to avoid a shutdown ahead of the Tuesday midnight deadline.
Market participants are also worried that the Bureau of Labor Statistics (BLS) might not be able to release the September employment report, which will include key Nonfarm Payrolls (NFP) and Unemployment Rate figures that the Federal Reserve (Fed) looks at while taking policy steps, this Friday if the government shutdowns midweek.
The US economic calendar will feature Pending Home Sales data for August later in the day, which is unlikely to trigger a significant market reaction. Investors will keep a close eye on the political developments in the US. In case Congress strikes a funding deal, the USD could stage a rebound and make it difficult for EUR/USD to extend its recovery.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart moves sideways near 50 in the European session, reflecting a neutral stance.
EUR/USD faces a pivot level at 1.1690-1.1700 (200-period Simple Moving Average (SMA), Fibonacci 38.2% retracement of the latest uptrend). In case the pair continues to use this level as support, technical buyers could remain interested. In this scenario, 1.1750 (100-period SMA), 1.1770 (Fibonacci 23.6% retracement) and 1.1820 (static level) could be seen as next resistance levels.
If EUR/USD fails to stabilize above 1.1690-1.1700, sellers could take action. On the downside, support levels could be spotted at 1.1640 (Fibonacci 50% retracement) and 1.1580 (Fibonacci 61.8% retracement).
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.
