EUR/USD Price Forecast: On its way to challenge the 2025 high

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1736

The US Dollar is under pressure ahead of the Federal Reserve's monetary policy decision.
Hawkish comments from ECB’s Isabel Schnabel underpinned the Euro on Monday.
EUR/USD is bullish in the near term and may soon test the 1.1830 yearly peak.

The EUR/USD pair started the week with a positive bias, advancing beyond the 1.1750 mark during European trading hours. The US Dollar (USD) trades with a softer tone amid a better market mood, and despite caution ahead of major central banks’ announcements scheduled throughout the week, including the Federal Reserve (Fed) monetary policy announcement.

The Fed is widely anticipated to cut the benchmark rate by 25 basis points (bps) in its September meeting, with market participants pricing in similar action in October and December. Investors will be looking for clues on the matter when Chair Jerome Powell delivers his press conference after announcing the decision.

Beyond the Fed, the Bank of Canada (BoC), the Bank of England (BoE), and the Bank of Japan (BoJ) will deliver monetary policy announcements these days, which may result in some choppy price action ahead of the announcements across the FX board.

Other than that, Germany released the August Wholesale Price Index, which fell by 0.6% on a monthly basis vs the expected 0.2% advance and following a 0.1% slide in July. The annual figure printed at 3.4%, below the 3.8% expected and the previous 3.7%. The Eurozone published the July Trade Balance, which posted a seasonally adjusted surplus of €5.3 billion, improving from the €3.7 billion posted in the previous month.

The Euro found some additional legs ahead of Wall Street’s opening on comments from European Central Bank (ECB) board member Isabel Schnabel, who said that interest rates in the EU are in a good place and added that upside risks to inflation continue to dominate. She also noted that growth is likely to exceed the potential, with domestic demand counteracting falling exports.

Across the pond, the US published the New York Empire State Manufacturing Index, which printed at -8.7 in September, down from the 11.9 posted in August.

EUR/USD short-term technical outlook

The EUR/USD pair trades around 1.1770, not far from the 2025 peak at 1.1830. The daily chart for the pair shows that it advances above all its moving averages, although the 20 Simple Moving Average (SMA) and the 100 SMA remain directionless, reflecting the latest range trading. In the meantime, technical indicators picked up within positive levels, heading higher with limited strength, supporting an upward extension without confirming it.

In the near term, and according to the 4-hour chart, the risk for EUR/USD skews to the upside. A bullish 20 SMA picks up momentum below the current level and above the longer ones, while providing intraday support at around 1.1720. Technical indicators, in the meantime, near overbought readings, without signs of upward exhaustion, hinting at a test of the mentioned yearly high.

Support levels: 1.1725 1.1670 1.1630

Resistance levels: 1.1830 1.1880 1.1910

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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