EUR/USD Forecast: Euro struggles to gather recovery momentum
- EUR/USD trades below 1.1850 in the early European session on Wednesday.
- ECB President Lagarde reportedly plans to step down before her term ends.
- The near-term technical outlook highlights a lack of buyer interest.
EUR/USD stays on the backfoot early Wednesday and trades below 1.1850 after closing virtually unchanged on Tuesday. The pair's technical outlook suggests that the bearish bias stays intact in the short term following the latest recovery attempt.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.34% | 0.66% | 0.69% | 0.39% | -0.02% | 0.50% | 0.43% | |
| EUR | -0.34% | 0.33% | 0.35% | 0.08% | -0.37% | 0.16% | 0.09% | |
| GBP | -0.66% | -0.33% | -0.23% | -0.25% | -0.71% | -0.17% | -0.24% | |
| JPY | -0.69% | -0.35% | 0.23% | -0.29% | -0.68% | -0.17% | -0.20% | |
| CAD | -0.39% | -0.08% | 0.25% | 0.29% | -0.45% | 0.11% | 0.04% | |
| AUD | 0.02% | 0.37% | 0.71% | 0.68% | 0.45% | 0.53% | 0.46% | |
| NZD | -0.50% | -0.16% | 0.17% | 0.17% | -0.11% | -0.53% | -0.07% | |
| CHF | -0.43% | -0.09% | 0.24% | 0.20% | -0.04% | -0.46% | 0.07% |
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).
EUR/USD edged lower in the first half of the day on Tuesday as the US Dollar (USD) benefited from the risk-averse market atmosphere. As Wall Street's main indexes stabilized near the previous week's closing levels, however, the USD struggled to preserve its strength and allowed EUR/USD to erase its losses. Meanwhile, Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee said that they could opt for several rate cuts in 2026 in case the progress on inflation resumes.
Early Wednesday, the Financial Times reported that European Central Bank (ECB) Christine Lagarde is planning to leave her position before the end of her eight-year term, more specifically ahead of the French Presidential election in April 2027.
Commenting on this headline, "we expect a limited impact of the new ECB president as EU leaders historically have aimed to strike a balance within the ECB's executive board between doves and hawks," said Danske Bank analysts and added:
"Even with the early departure, EU leaders have plenty of time to discuss and select a new president as part of the large shift taking place in ECB top positions the coming two years."
Later in the day, the US economic calendar will feature Durable Goods Orders data for December and Industrial Production for January. In the American session, the Fed will publish the minutes of the January policy meeting. The CME Group FedWatch Tool currently shows that markets are already pricing in about a 92% probability of a Fed policy hold in March. Hence, the market reaction to the Fed's publication is likely to remain muted.
EUR/USD Technical Analysis:
In the 4-hour chart, EUR/USD trades at 1.1834. The 20-period Simple Moving Average (SMA) slides beneath the 50 and 100 SMAs, signaling fading near-term momentum. Price trades below these short- and medium-term gauges but holds above the gently rising 200 SMA, which supports the broader bias. The 20 SMA at 1.1851 serves as immediate resistance.
The Relative Strength Index (14) prints 43, below the midline, indicating bearish pressure without oversold conditions. Measured from the 1.1590 low to the 1.2026 high, the 50% retracement at 1.1808 and the 61.8% retracement at 1.1757 offer layered support. On rebounds, resistance aligns at the 50–100 SMA band at 1.1863–1.1869. A close below 1.1808 would expose 1.1757, while reclaiming the 1.1863–1.1869 band could ease downside pressure and improve recovery prospects toward 1.1900 (static level) and 1.1925 (Fibonacci 23.6% retracement).
(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.
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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.
