EUR/USD Forecast: Euro sellers retain control ahead of key data releases
- EUR/USD struggles to stage a rebound in the European session on Friday.
- Markets await PMI reports from the Euro area and US GDP data.
- The technical outlook highlights a bearish stance in the near term.
Following Wednesday's sharp decline, EUR/USD continued to edge lower and closed in negative territory on Thursday. The pair stays on the back foot early Friday and trades slightly above 1.1750.
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 | 0.98% | 1.41% | 1.63% | 0.60% | 0.36% | 1.36% | 0.93% | |
| EUR | -0.98% | 0.43% | 0.64% | -0.38% | -0.63% | 0.37% | -0.05% | |
| GBP | -1.41% | -0.43% | -0.04% | -0.80% | -1.05% | -0.05% | -0.47% | |
| JPY | -1.63% | -0.64% | 0.04% | -1.01% | -1.23% | -0.26% | -0.65% | |
| CAD | -0.60% | 0.38% | 0.80% | 1.01% | -0.28% | 0.76% | 0.33% | |
| AUD | -0.36% | 0.63% | 1.05% | 1.23% | 0.28% | 1.01% | 0.61% | |
| NZD | -1.36% | -0.37% | 0.05% | 0.26% | -0.76% | -1.01% | -0.42% | |
| CHF | -0.93% | 0.05% | 0.47% | 0.65% | -0.33% | -0.61% | 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 US Dollar (USD) preserved its strength after Wednesday's impressive rallly that was fuelled by the hawkish tone seen in the Federal Reserve's (Fed) minutes of the January policy meeting. Additionally, the risk-averse market atmosphere helped the USD outperform its rivals as investors reacted to escalating geopolitical tensions in the Middle East, with reports suggesting that the US could take military action against Iran as early as this weekend.
BBC reported late Thursday that US President Donald Trump said that Iran must make a deal, or “bad things will happen." Iran told UN Secretary-General Antonio Guterres that it does not seek war but said that they will not tolerate military aggression. Moreover, Iranian officials reportedly also warned of a decisive response if the US takes military action over the nuclear dispute.
Later in the European session, HCOB Manufacturing and Services Purchasing Managers' Index (PMI) reports from Germany and the Eurozone will be watched closely by market participants. In case PMI figures come in above 50 and reflect ongoing expansion in the private sector's business activity, the Euro could keep its footing and allow EUR/USD to find support.
In the American trading hours, the US Bureau of Economic Analysis will publish its first estimate of the Gross Domestic Product (GDP) growth for the fourth quarter. Investors expect the US' GDP to grow at an annural rate 3% in Q4, following the impressive 4.4% growth recorded in Q3. A positive surprise could support the USD and force EUR/USD to extend its weekly slide. Conversely, a disappointing print, at or below 2%, could open the door for a rebound in the pair heading into the weekend.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1761. The 20-, 50-, and 100-period Simple Moving Averages (SMAs) slope lower and sit above price, underscoring persistent selling pressure. The 200-period SMA edges higher but remains overhead, acting as initial resistance at 1.1782. The Relative Strength Index (RSI) stays near 30 (oversold), suggesting that there could be a correction before the resumption of the downtrend.
Measured from the 1.1590 low to the 1.2026 high, the 61.8% retracement aligns as a key technical level at 1.1757. A close beneath would expose the 78.6% retracement at 1.1683 ahead of 1.1600 (static level, round level). On the upside, . The descending trend line from 1.2023 caps rebounds, with resistance seen near 1.1840, and failure to reclaim that barrier would keep rallies short-lived.
(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.
