EUR/USD Forecast: Euro sellers likely to ignore oversold conditions
- EUR/USD fell to its lowest level since August below 1.1500 on Friday.
- The USD gathers strength as inflation fears drive Fed repricing.
- The technical outlook highlights a bearish bias, with oversold conditions.
EUR/USD stays under bearish pressure after posting losses for three consecutive days and trades at its lowest level since August below 1.1500. The technical outlook points to oversold conditions but sellers could refrain from betting on a steady rebound in the near term.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.69% | 0.37% | 0.83% | 0.44% | -0.66% | 0.96% | 1.07% | |
| EUR | -0.69% | -0.33% | 0.15% | -0.26% | -1.35% | 0.26% | 0.37% | |
| GBP | -0.37% | 0.33% | 0.49% | 0.07% | -1.02% | 0.60% | 0.70% | |
| JPY | -0.83% | -0.15% | -0.49% | -0.37% | -1.46% | 0.15% | 0.25% | |
| CAD | -0.44% | 0.26% | -0.07% | 0.37% | -1.11% | 0.52% | 0.63% | |
| AUD | 0.66% | 1.35% | 1.02% | 1.46% | 1.11% | 1.63% | 1.74% | |
| NZD | -0.96% | -0.26% | -0.60% | -0.15% | -0.52% | -1.63% | 0.10% | |
| CHF | -1.07% | -0.37% | -0.70% | -0.25% | -0.63% | -1.74% | -0.10% |
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).
Crude Oil prices rose sharply on Thursday and fed into inflation fears as the crisis in the Middle East escalated further. Iran’s new supreme leader, Mojtaba Khamenei, said in his first public statement that the closure of the Strait of Hormuz maritime passage should be continued as a “tool to pressure the enemy,” while the Islamic Revolutionary Guard Corps has reportedly threatened to set the region’s oil and gas infrastructure on fire if Iranian energy sites are attacked.
According to the CME FedWatch Tool, the probability of the Federal Reserve (Fed) leaving the policy rate unchanged in the next three consecutive meetings climbed above 75% from about 63% early Thursday. In turn, the US Dollar (USD) gathered strength, forcing EUR/USD to stretch lower.
The US economic calendar will feature Personal Consumption Expenditures (PCE) Price Index data for January and the US Bureau of Economic Analysis (BEA) will publish the second estimate of the annualized Gross Domestic Product (GDP) growth for the fourth quarter.
Investors are likely to ignore these data and stay focused on changes in Oil prices and the market mood. At the time of press, US stock index futures were down between 0.2% and 0.4%. In case safe-haven flows dominate the action in financial markets in the second half of the day, EUR/USD could extend its slide heading into the weekend. Conversely, a sharp correction in Oil prices could help the risk mood improve and open the door for a rebound in the pair.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1470. The near-term bias turns bearish as the pair slips below the clustered 20- and 50-period Moving Averages (MAs), while the 100- and 200-period MAs above price around 1.17 reinforce a broader downside context. Price holds near the lower Bollinger Band, indicating persistent selling pressure and compressed downside volatility rather than an oversold snapback. The Relative Strength Index (RSI) at 29.99 moves into oversold territory, aligning with the bearish tone but also flagging the risk of short-covering bounces within a declining structure.
Immediate resistance is now seen at 1.1500, where a prior horizontal barrier aligns just above price and would cap any corrective upticks, followed by the higher resistance at 1.1670 near the descending longer-term averages. On the downside, the next key support sits at 1.1460, with a break lower exposing the more distant 1.1400 level as the next bearish target. As long as EUR/USD trades below 1.1500, rallies are set to face selling interest, and the path of least resistance remains to the downside toward the lower support band.
(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.
