EUR/USD Forecast: Euro sellers could take action if 1.1650 support fails
- EUR/USD edges lower to start the new week.
- The pair faces a key support area at 1.1650.
- Risk sentiment could drive EUR/USD's action in the absence of high-tier data releases.
EUR/USD starts the new week on the back foot and trades in negative territory below 1.1700. In the absence of high-tier macroeconomic data releases, the market mood could drive the pair's action in the short term.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.24% | 0.03% | 0.10% | -0.15% | -0.10% | -0.27% | 0.18% | |
| EUR | -0.24% | -0.21% | -0.15% | -0.39% | -0.32% | -0.54% | -0.05% | |
| GBP | -0.03% | 0.21% | -0.04% | -0.18% | -0.11% | -0.33% | 0.12% | |
| JPY | -0.10% | 0.15% | 0.04% | -0.22% | -0.18% | -0.34% | 0.09% | |
| CAD | 0.15% | 0.39% | 0.18% | 0.22% | 0.03% | -0.12% | 0.30% | |
| AUD | 0.10% | 0.32% | 0.11% | 0.18% | -0.03% | -0.22% | 0.23% | |
| NZD | 0.27% | 0.54% | 0.33% | 0.34% | 0.12% | 0.22% | 0.42% | |
| CHF | -0.18% | 0.05% | -0.12% | -0.09% | -0.30% | -0.23% | -0.42% |
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 cautious market stance helps the US Dollar (USD) hold its ground early Monday and causes EUR/USD to stretch lower. Investors stay away from risk-sensitive assets while waiting for the outcome of United States (US) President Donald Trump's meeting with Ukrainian President Volodymyr Zelenskyy.
On Friday, Trump met with Russian President Vladimir Putin. US special envoy Steve Witkoff said on Sunday that the sides agreed that the US will offer security guarantees to Ukraine. According to Witkoff, the deal did not enable Ukraine to achieve its goal of NATO membership.
According to CNN, Trump will tell Zelenskyy on Monday that Ukraine must agree to some of Russia's conditions, including that Ukraine cede Crimea and agree never to join NATO, for the war to end.
In case markets remain risk-averse following the Wall Street's opening bell, EUR/USD could have a hard time regaining its traction. On the other hand, the pair could reverse its direction if risk flows return to markets on easing geopolitical tensions. At the time of press, US stock index futures were down between 0.1% and 0.2%.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart declines toward 50, reflecting buyers' hesitancy.
On the downside, a key support level seems to have formed at 1.1650, where the 200-period Simple Moving Average (SMA), meets the Fibonacci 23.6% retracement of the latest uptrend, the 20-day SMA and the 50-day SMA. In case EUR/USD falls below this level and confirms it as resistance, technical sellers could take action. In this scenario, 1.1610-1.1600 (100-period SMA, round level) could be seen as the next support level before 1.1540 (Fibonacci 38.2% retracement) and 1.1500 (static level, round level).
In case 1.1650 holds as support, sellers could hesitate. Looking north, resistance levels could be seen at 1.1720 (static level), 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.
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.
