EUR/USD Price Forecast: Bulls gain confidence as US government reopens

EUR/USD Current price: 1.1619

• The United States government reopened after the longest shutdown in its history.
• EU Industrial Production grew by less than anticipated in September, weighing on the EUR.
• EUR/USD is bullish in the near term, needs to overcome 1.1635, the daily peak.

The EUR/USD pair traded as high as 1.1635 during European trading hours on Thursday, as optimism fueled demand for high-yielding assets. Late on Wednesday, the United States (US) House of Representatives approved a bill to fund the government, ending the longest shutdown in the country’s history. The bill, which funds the government until January 30, was then signed by President Donald Trump, resuming federal operations.

The positive market mood partially faded in the European session, as investors geared up for US data releases that were suspended or delayed by the shutdown. Official figures are expected to be released starting mid-next week and will likely impact the Federal Reserve's (Fed) December monetary policy decision. At this point, market players believe there are equal odds of a 25-basis-point (bps) rate cut versus an on-hold decision.

Wall Street kick-starts the day with a soft tone, while government bond yields tick higher, in line with mounting caution. As a result, the EUR/USD pair retreated from the aforementioned high, yet holds above the 1.1600 threshold.

Data-wise, the EU released September Industrial Production, which was up 0.2% MoM in September, and rose by 1.2% from a year earlier, missing expectations of 0.7% and 2.1% respectively. The American session will once again focus on speeches by Fed officials.

EUR/USD short-term technical outlook

The EUR/USD pair's 4-hour chart shows that buyers are holding the grip. The 20-period Simple Moving Average (SMA) rises above the 100-period SMA but remains below the 200-period SMA, although the pair holds above them all, supporting a continued advance. The 20 and 100 SMAs converge around 1.1580, providing a relevant support area. At the same time, the Momentum indicator advances within positive levels, pointing to strengthening buying pressure. Finally, the Relative Strength Index (RSI) stands at 66, with a firm upward slope, also supporting another leg north.

In the daily chart, the EUR/USD pair found intraday buyers around the 20-day Simple Moving Average (SMA), which maintains a modest downward slope. The 100-day SMA has flattened at around 1.1664, becoming a critical dynamic resistance. Other than that, the Momentum indicator is stable around its midline, hinting at cautious buying. Finally, the Relative Strength Index (RSI) prints 52.74, and heads firmly north, limiting the odds for a steeper retracement.

(The technical analysis of this story was written with the help of an AI tool)