EUR/USD Forecast: Recovery attempts could remain shallow
- EUR/USD clings to small daily gains near 1.1550 early Friday.
- The technical outlook doesn't yet point to a reversal in the near term.
- Markets await preliminary November PMI data from the US.
EUR/USD extended its weekly slide and closed in negative territory on Thursday. The pair stages a modest rebound and trades near 1.1550 in the European morning on Friday as market focus shifts to the Purchasing Managers' Index (PMI) data from the US.
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 | 0.65% | 0.49% | 1.43% | 0.44% | 1.34% | 1.31% | 1.30% | |
| EUR | -0.65% | -0.06% | 1.14% | -0.19% | 0.67% | 0.67% | 0.67% | |
| GBP | -0.49% | 0.06% | 0.92% | -0.13% | 0.73% | 0.73% | 0.73% | |
| JPY | -1.43% | -1.14% | -0.92% | -0.95% | -0.07% | -0.11% | -0.15% | |
| CAD | -0.44% | 0.19% | 0.13% | 0.95% | 0.89% | 0.86% | 0.86% | |
| AUD | -1.34% | -0.67% | -0.73% | 0.07% | -0.89% | 0.00% | 0.00% | |
| NZD | -1.31% | -0.67% | -0.73% | 0.11% | -0.86% | -0.00% | -0.00% | |
| CHF | -1.30% | -0.67% | -0.73% | 0.15% | -0.86% | -0.00% | 0.00% |
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 Bureau of Labor Statistics (BLS) reported on Thursday that Nonfarm Payrolls (NFP) rose by 119,000 in September. This print followed the 4,000 decrease recorded in August and surpassed the market expectation of 50,000. On a negative note, the change in NFP for July was revised down by 7,000, from +79,000 to +72,000, and the change for August was revised down by 26,000, from +22,000 to -4,000. Other details of the report showed that the Unemployment Rate edged higher to 4.4% from 4.3%.
The market reaction to the September employment report remained short-lived and the risk-averse market atmosphere helped the US Dollar (USD) hold its ground, not allowing EUR/USD to rebound in the American session on Thursday.
Early Friday, the data from Germany showed that preliminary HCOB Services PMI declined to 52.7 in November from 54.6, while the Manufacturing PMI edged lower to 48.4 from 49.6.
Assessing the survey's findings, "the German economy is limping towards marginal growth at best in the fourth quarter," said Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said.
Later in the day, S&P Global PMI data from the US will be scrutinized by investors. In case both headline PMIs arrive in the expansion territory above 50, the USD could preserve its strength heading into the weekend and make it difficult for EUR/USD to keep its footing. Conversely, a reading below 50 in either the Manufacturing or Services PMI could help the pair extend its recovery in the second half of the day.
EUR/USD Technical Analysis:
The 20-period Simple Moving Average (SMA) extends its slide beneath the 50- and 100-period SMAs, while the 200-period SMA also declines. Price holds below all these moving averages, preserving a bearish bias. The Relative Strength Index (RSI) sits at 46, recovering from earlier oversold readings yet still below the 50 midline.
Measured from the 1.1885 high to the 1.1470 low, Fibonacci retracements frame rebounds as corrective. The 23.6% retracement at 1.1568 aligns as the immediate resistance, before the 38.2% retracement at 1.1629. On the downside, 1.1500 (round level) could be seen as an interim support level before 1.1470 (end-point of the downtrend), 1.1450 (static level) and 1.1400 (static level).
(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.
