EUR/USD Forecast: Euro struggles to extend recovery
- EUR/USD trades near 1.1500 after snapping a four-day losing streak on Monday.
- The pair's technical outlook doesn't point to a buildup of recovery momentum.
- Oil prices rise again as the EU resists the US' pressure to help secure the Strait of Hormuz.
EUR/USD fluctuates in a tight channel at around 1.1500 in the European morning on Tuesday after closing in positive territory on Monday. The pair's technical outlook doesn't yet signal a bullish reversal.
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 weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.06% | 0.75% | 0.91% | 0.73% | -0.18% | 1.59% | 1.22% | |
| EUR | -1.06% | -0.28% | -0.16% | -0.33% | -1.23% | 0.53% | 0.17% | |
| GBP | -0.75% | 0.28% | 0.15% | -0.05% | -0.95% | 0.81% | 0.44% | |
| JPY | -0.91% | 0.16% | -0.15% | -0.11% | -1.11% | 0.68% | 0.29% | |
| CAD | -0.73% | 0.33% | 0.05% | 0.11% | -0.98% | 0.79% | 0.49% | |
| AUD | 0.18% | 1.23% | 0.95% | 1.11% | 0.98% | 1.78% | 1.40% | |
| NZD | -1.59% | -0.53% | -0.81% | -0.68% | -0.79% | -1.78% | -0.35% | |
| CHF | -1.22% | -0.17% | -0.44% | -0.29% | -0.49% | -1.40% | 0.35% |
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).
Improving risk mood made it difficult for the US Dollar (USD) to find demand on Monday and allowed EUR/USD to gain traction and snap a four-day losing streak.
However, the negative shift seen in market sentiment, triggered by a renewed uptick in Oil prices, supports the USD early Tuesday and makes it difficult for EUR/USD to extend its recovery.
Foreign ministers from the 27 European Union countries gathered in Brussels on Monday to discuss whether they should help the US and Israel secure the Strait of Hormuz. Following the meeting, EU foreign policy chief Kaja Kallas said that there was "no appetite" for changing the mandate of the Operation Aspides, an EU naval force with the mission of responding to Houthi engagements with international shipping in the Red Sea. "This is not Europe's war," she noted.
Additionally, "the Americans chose this path, together with the Israelis,” German Defense Minister Boris Pistorius said and added that Germany’s main responsibility is to defend NATO territory, as per Politico.
The economic calendar will not feature any high-impact macroeconomic data releases on Tuesday. Hence, investors are likely to remain focused on risk perception, while waiting for the Federal Reserve (Fed) to announce monetary policy decisions on Wednesday.
At the time of press, US stock index futures were down between 0.3% and 0.5% on the day. In case risk flows continue to dominate the action in financial markets, EUR/USD is likely to stay on the back foot.
EUR/USD Technical Analysis:
The near-term bias is mildly bearish as EUR/USD holds below the 50- and 100-period Moving Averages (MAs) on the 4-hour chart, while these averages all slope lower beneath the 200-period MA, reinforcing a downward structure. The Relative Strength Index (RSI) hovers in the mid-40s, showing weak momentum and aligning with a corrective downside phase rather than an oversold capitulation.
Immediate resistance stands at 1.1530 (static level) ahead of 1.1550-1.1565 region, where the 50-period SMA and the upper line of the Bollinger Band align, and 1.1650 (100-period SMA). On the downside, initial support is seen at 1.1460, guarding the recent lows; a clear drop below this level would expose the lower 1.14 area, in line with the bearish bias implied by the broader moving-average configuration.
(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.
