EUR/USD Forecast: Euro shows signs of bearish tilt ahead of US data
- EUR/USD trades in positive territory above 1.1350 after a two-day decline.
- The technical outlook shows signs of a bearish tilt in the near term.
- The US economic calendar will feature mid-tier data releases.
EUR/USD remained under bearish pressure and lost about 1% on Wednesday. After touching a fresh weekly low near 1.1300, the pair regained its traction and rose above 1.1350 on Thursday. Despite this recent rebound, the near-term technical outlook is yet to point to a buildup in bullish momentum.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.18% | 0.05% | 0.33% | -0.01% | 0.06% | -0.67% | 1.13% | |
| EUR | -0.18% | -0.28% | 0.15% | -0.23% | -0.29% | -0.88% | 0.92% | |
| GBP | -0.05% | 0.28% | 0.61% | 0.07% | -0.01% | -0.60% | 1.21% | |
| JPY | -0.33% | -0.15% | -0.61% | -0.35% | -0.38% | -0.87% | 0.83% | |
| CAD | 0.00% | 0.23% | -0.07% | 0.35% | -0.04% | -0.65% | 1.16% | |
| AUD | -0.06% | 0.29% | 0.01% | 0.38% | 0.04% | -0.57% | 1.22% | |
| NZD | 0.67% | 0.88% | 0.60% | 0.87% | 0.65% | 0.57% | 1.84% | |
| CHF | -1.13% | -0.92% | -1.21% | -0.83% | -1.16% | -1.22% | -1.84% |
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) kept its footing mid-week after the Wall Street Journal reported that the White House was considering slashing tariffs on Chinese goods to de-escalate the trade conflict. Commenting on the US-China trade relations later in the day, United States (US) Treasury Secretary Scott Bessent noted that both sides are aware that current tariff levels are not sustainable, adding that he would not be surprised if they were to come down in a mutual way.
This German business sentiment index released by the CESifo Group will be watched closely by market participants. A significant deterioration in business confidence in Germany could weigh on the Euro with the immediate reaction.
In the second half of the day, the US Department of Labor will publish the weekly Initial Jobless Claims data. Markets expect the number of first-time application for unemployment benefits to rise to 221,000 from 215,000. A reading near 200,000 could help the USD gather strength and cause EUR/USD to turn south. On the flip side, a disappointing print of 230,000, or higher, could have the opposite impact on the pair's action. The US economic calendar will also feature Durable Goods Orders and Existing Home Sales data for March.
EUR/USD Technical Analysis
EUR/USD trades below the 20-period and the 50-period Simple Moving Averages (SMA) on the 4-hour chart, while the Relative Strength Index (RSI) indicator remains below 50, highlighting a lack of buyer interest.
On the downside, the lower limit of the ascending channel aligns as a key support level at 1.1340 ahead of 1.1280 (static level) and 1.1220 (100-period SMA). Looking north, resistances could be spotted at 1.1400 (50-period SMA), 1.1450 (20-period SMA) 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.
