EUR/USD Price Forecast: Range trading continues ahead of Fed

EUR/USD Current price: 1.1339

• German political noise limited demand for the EUR throughout the first half of the day.
• The US Dollar remains offered ahead of the Federal Reserve’s announcement on Wednesday.
• EUR/USD maintains its positive bias, but caution limits the near-term momentum.

Broad US Dollar (USD) weakness is not enough for EUR/USD to extend its upward trajectory, with the pair trading at around 1.1340 early in the American session. The Euro (EUR) eased on headlines indicating political turmoil in Germany, given that Friedrich Merz, the conservative leader who won the election over two months ago, was unable to secure a majority in parliament to become chancellor. Merz needed 316 out of the 630 seats at the Bundestag, but only secured 310. Still, the USD is the weakest currency across the FX board, preventing EUR/USD from falling further.

Another factor keeping the EUR afloat is data. The Hamburg Commercial Bank (HCOB) released the final estimates of the April Services and Composite Purchasing Managers’ Index (PMI), which resulted better than previously estimated. Germany's service sector slipped back into contraction in April after having grown in each of the previous four months, according to the official report, albeit the Services PMI was confirmed at 49, better than the 48.8 previously calculated. The Composite PMI resulted at 50.1, revised from 49.7.

As for the Eurozone (EU), services output was confirmed at 50.1, while the Composite PMI was upwardly revised from 50.1 to 50.4. “The euro area economy eked out further growth at the start of the second quarter, but the pace of expansion was again marginal and even slowed on the month,” according to the HCOB survey.

The United States (US) published the March Goods and Services Trade Balance, which posted a deficit of $140.5 billion, worsening from the previous $-123.2 billion.

The US Federal Reserve (Fed) will announce its decision on monetary policy on Wednesday, granting a dose of caution ahead of the event. The central bank is widely anticipated to keep interest rates on hold, maintaining a wait-and-see approach amid tariffs-related uncertainty.

EUR/USD short-term technical outlook

The EUR/USD pair remains confined to familiar levels, lacking directional momentum, yet with a well-limited bearish potential. In the daily chart, the pair seesaws around a bullish 20 Simple Moving Average (SMA), showing sellers and buyers are battling for direction. At the same time, the Momentum indicator turned marginally lower at around its 100 line, while the Relative Strength Index (RSI) indicator heads nowhere at around 58, in line with the limited intraday movements.

In the near-term and according to the 4-hour chart, the EUR/USD pair is neutral. A flat 100 SMA provides resistance at around 1.1370, while the 20 and 200 SMAs remain below the current level with no clear directional strength. At the same time, technical indicators stand pat just above their midlines, in line with the ongoing range-trading.

Support levels: 1.1275 1.1230 1.1190

Resistance levels: 1.1370 1.1410 1.1465