EUR/USD Forecast: Euro stabilizes near multi-month highs
- EUR/USD trades in a narrow range above 1.0800 to start the week.
- The pair could stay in a consolidation phase in the near term.
- The US economic calendar will feature February inflation data later in the week.
EUR/USD gained more than 4% in the previous week and touched its highest level since early November near 1.0890 on Friday. The pair stays relatively quiet and fluctuates in a tight channel above 1.0800 in the early European session on Monday.
Euro PRICE Last 7 days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -4.11% | -2.46% | -1.99% | -0.62% | -1.82% | -2.30% | -2.55% | |
| EUR | 4.11% | 1.60% | 2.00% | 3.45% | 2.29% | 1.70% | 1.45% | |
| GBP | 2.46% | -1.60% | 0.51% | 1.82% | 0.68% | 0.09% | -0.15% | |
| JPY | 1.99% | -2.00% | -0.51% | 1.61% | 0.21% | -0.28% | -0.59% | |
| CAD | 0.62% | -3.45% | -1.82% | -1.61% | -1.06% | -1.69% | -1.94% | |
| AUD | 1.82% | -2.29% | -0.68% | -0.21% | 1.06% | -0.58% | -0.82% | |
| NZD | 2.30% | -1.70% | -0.09% | 0.28% | 1.69% | 0.58% | -0.25% | |
| CHF | 2.55% | -1.45% | 0.15% | 0.59% | 1.94% | 0.82% | 0.25% |
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) remained under heavy selling pressure last week as the disappointing macroeconomic data releases, in addition to US President Donald Trump's tariff decisions, fed into fears over an economic downturn in the US.
The data published by the US Bureau of Labor Statistics showed on Friday that Nonfarm Payrolls rose by 151,000 in February. This reading missed the market expectation for an increase of 160,000. Other details of the employment report showed that the Unemployment Rate edged higher to 4.1% from 4% in January, while the annual wage inflation rose to 4% from 3.9% in the same period. Later in the day, Federal Reserve (Fed) Chairman Jerome Powell said that the uncertainty around the Trump administration's policies are high. Powell reiterated that they can maintain policy restraint for longer if inflation progress stalls, or that they can ease the policy if the labor market unexpectedly weakens. These comments failed to trigger a market reaction and allowed EUR/USD to stabilize in the upper half of its weekly range.
The Fed will be in the blackout period this week. On Wednesday, February Consumer Price Index (CPI) will be featured in the US economic calendar.
Meanwhile, US stock index futures were last seen losing between 0.4% and 0.6%. Although a bearish action in Wall Street could help the USD find demand, investors could refrain from betting on a steady recovery in the currency.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart retreated slightly below 70, suggesting that the bullish bias remains intact following a technical correction. On the downside, 1.0800 (static level, 20-period Simple Moving Average (SMA), round level) aligns as first support before 1.0760 (static level) and 1.0730 (200-day SMA).
Looking north, first resistance could be spotted at 1.0870 (200-week SMA) ahead of 1.0900 (round level, static level) and 1.0940 (static 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.
(This story was corrected on March 10 at 09:48 GMT to say that the annual wage inflation in the US rose to 4% from 3.9%, not 4.9%.)
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.
