EUR/USD Forecast: Euro struggles to find demand on risk-aversion
- EUR/USD declines toward 1.1500 in the European session on Friday.
- The US Dollar benefits from risk-aversion and gathers strength.
- The technical outlook points to a bearish tilt in the near term.
EUR/USD stays under modest bearish pressure and declines toward 1.1500 on Friday after posting losses for three consecutive days. The near-term technical outlook and the risk-averse market atmosphere suggest that the pair could have a difficult time staging a decisive 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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.16% | 0.00% | 0.34% | 0.98% | 1.58% | 0.97% | 1.06% | |
| EUR | -0.16% | -0.15% | 0.20% | 0.83% | 1.40% | 0.81% | 0.90% | |
| GBP | -0.01% | 0.15% | 0.28% | 0.97% | 1.57% | 0.96% | 0.98% | |
| JPY | -0.34% | -0.20% | -0.28% | 0.60% | 1.21% | 0.58% | 0.61% | |
| CAD | -0.98% | -0.83% | -0.97% | -0.60% | 0.61% | -0.02% | 0.07% | |
| AUD | -1.58% | -1.40% | -1.57% | -1.21% | -0.61% | -0.60% | -0.57% | |
| NZD | -0.97% | -0.81% | -0.96% | -0.58% | 0.02% | 0.60% | 0.03% | |
| CHF | -1.06% | -0.90% | -0.98% | -0.61% | -0.07% | 0.57% | -0.03% |
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).
United States (US) President Donald Trump announced on Thursday that they will postpone the plan to attack Iran's energy infrastructure for another 10 days to April 6, as per the Iranian government's request. Trump also noted that talks between Washington and Tehran was going "very well." Investors seemingly didn't assess this headline as a sign of de-escalation, with Wall Street's main indexes suffering heavy losses on the day.
Early Friday, US stock index futures trade marginally lower on the day and the US Dollar (USD) Index clings to moderate gains at around 100.00, suggesting that markets remain risk-averse.
The economic calendar will not feature any high-tier data releases on Friday. Investors could seek refuge heading into the weekend amid heightened risks of a ground invasion amid the US military buildup in the Middle East. In this scenario, the USD could continue to find demand as a safe-haven and force EUR/USD to stay on the backfoot.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1520. The near-term bias is mildly bearish as the pair holds below the 20-period and 50-period and the 100-period Simple Moving Averages (SMAs). The price also remains in the lower half of the Bollinger Band, while the Relative Strength Index (RSI) indicator declines toward 40, indicating soft bearish momentum rather than oversold conditions.
Immediate support stands at 1.1500 (round level, static level, lower Bollinger Band) ahead of 1.1400 (static level, round level). If buyers defend 1.1500, initial resistance emerges at 1.1550 (100-period SMA, 50-period SMA) before 1.1630 (upper Bollinger Band) and 1.1670 (200-period SMA).
(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.
