EUR/USD Price Forecast: Bulls take over

EUR/USD Current price: 1.1885

• The Liberal Democratic Party secured a majority after the weekend Japanese election.
• EU Sentix Investor Confidence improved in February to 4.2 from the previous -1.8.
• EUR/USD turned bullish in the near term and aims to extend its advance beyond 1.1900.

The EUR/USD pair trades with a positive tone on Monday, nearing the 1.1900 threshold early in the American session. The US Dollar (USD) trades with a softer tone across the FX board, initially weighed by the outcome of the Japanese election. Prime Minister (PM) Sanae Takaichi’s party, the Liberal Democratic Party (LDP), secured a majority in the country’s lower house of parliament, prompting demand for the Japanese Yen (JPY) and local stocks, with the Nikkei surging roughly 3.90%.

European indexes, however, trimmed most of their initial gains amid a souring mood following headlines indicating that Chinese regulators ordered banks to reduce their United States (US) holdings.

Data-wise, the Eurozone (EU) Sentix Investor Confidence index, which improved in February to 4.2 from -1.8 previously. The US has no data scheduled, although several Federal Reserve (Fed) and officials will be on the wires.

The US calendar, however, will be packed with first-tier releases: Retail Sales will be released on Tuesday, the January Nonfarm Payrolls (NFP) report will be released on Wednesday, and Consumer Price Index (CPI) figures will be released on Friday.

EUR/USD short-term technical outlook

From a technical point of view, EUR/USD is bullish. In the 4-hour chart, EUR/USD trades above all its moving averages, with the 20-period Simple Moving Average (SMA) climbing above the 100 and 200 SMAs. The 20 SMA stands at 1.1811, while the 100 SMA hovers around 1.1803, providing strong near-term support. Meanwhile, the Momentum indicator is trending north of its midline, albeit with moderate strength. Finally, the Relative Strength Index (RSI) indicator advances at 67, supporting another leg north.

In the daily chart, the 20-day SMA aims firmly north above the longer SMAs, and the pair holds above them, reinforcing a bullish bias. The 20-day SMA at 1.1785 attracted buyers last Friday and now serves as an inflection point. At the same time, the RSI indicator heads firmly north at around 58, while the Momentum indicator flattened above its midline. The risk skews to the upside, although a clear advance beyond 1.1900 is needed to confirm higher highs ahead.

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