EUR/USD Price Forecast: Recovery keeps targeting the 200-day SMA
- EUR/USD builds on recent gains and looks to surpass 1.1500 in a convincing fashion.
- The US Dollar comes under further downside pressure, receding from recent tops.
- The Economic Sentiment worsened in the EMU and Germany in March, ZEW said.
The short-term picture for EUR/USD has been becoming worse and worse since it was pulled down from the annual highs at the 1.2100 level in late January. The pair's recent drop below the crucial 200-day Simple Moving Average (SMA) also hints at a potential deeper pullback down the road.
EUR/USD seems to have met some fresh buying interest on Tuesday, adding to gains recorded at the beginning of the week and looking to clear the key barrier at 1.1500 the figure in a more sustainable fashion.
The second consecutive advance in spot comes amid further selling pressure on the US Dollar (USD), despite the Middle East crisis showing no firm signs of giving way for now.
In the meantime, the US Dollar Index (DXY) navigates the area of three-day lows, revisiting the 99.50 zone in tandem with another daily retracement in US Treasury yields across the spectrum.
Fed: comfortable, but not committing
A “hold” decision from the Federal Reserve (Fed) on Wednesday is now almost fully priced in, although markets still anticipate around 27 basis points of easing by year-end.
At its previous meeting, the Federal Open Market Committee (FOMC) sounded increasingly comfortable with the broader macro backdrop. Growth continues to hold up well, employment risks are no longer seen as deteriorating, and while inflation remains somewhat elevated, the urgency around it has clearly eased.
Chair Jerome Powell described policy as being in a “good place”, reiterating that decisions will remain firmly meeting by meeting. On tariffs, he acknowledged they continue to generate inflation noise, although he also pointed to ongoing disinflation in the services sector.
Importantly, Powell made it clear that neither a rate hike nor an imminent easing cycle is the base case. In other words, the Fed is in no rush to move.
The Minutes reinforced that balanced message. Rate cuts remain possible if inflation continues to cool, although hikes have not been ruled out should price pressures prove more persistent than expected. In short, the Fed remains firmly data dependent.
ECB: steady hand, cautious optimism
The European Central Bank (ECB) is also widely expected to leave rates unchanged at Thursday’s meeting.
In her latest remarks, President Christine Lagarde struck a calm but cautious tone. Inflation is still projected to return to the 2% target over the medium term, although services inflation remains under close scrutiny and the disinflation process is expected to extend into 2026.
Lagarde also highlighted resilient wage growth, a still solid labour market and stable investment dynamics across the euro area. At the same time, she reiterated that while the ECB monitors the euro (EUR), it does not target the exchange rate.
Markets currently price nearly 38 basis points of tightening by year-end, while a hold this week is seen as a done deal.
For now, the ECB appears broadly comfortable with its current stance, while continuing to emphasise a cautious, data-dependent approach.
EUR positioning: still long, but less conviction
The most recent figures from the Commodity Futures Trading Commission (CFTC) suggest a significant change in how speculators are betting on the Euro (EUR) in the week ending March 10.
Speculators cut their net long exposure to around 105.1K contracts, which means that big accounts have begun to reduce their bullish wagers.
Open interest also went up to around 969.4K contracts, which means that new people are becoming involved in the market.
That said, the number of net longs went down, but the number of open interests went up. This means that new positions were established even if existing longs were cut down, not just a simple unwinding of exposure.
The broader takeaway is that positioning remains net long EUR, although conviction is beginning to soften at the margin.
What’s next?
Near term: the US dollar will continue to set the tone as markets deal with trade uncertainties and ongoing geopolitical concerns. At the same time, decisions made by central banks are still the most important thing, with the Fed on Wednesday and the ECB on Thursday.
Risks: If things become worse in the Middle East, the Greenback may become even more appealing as a safe haven, which might hurt risk-sensitive assets. If the price stays below the 200-day SMA for a long time, it would be more likely to make a deeper decline.
Technical corner
In the daily chart, EUR/USD trades at 1.1546. The near-term bias is mildly bearish as the pair holds beneath the 55- and 100-day Simple Moving Averages (SMAs), which cap the upside in the 1.1690-1.1730 band, while the 200-day SMA around 1.1670 remains a broader ceiling. Price has slipped away from the mid-1.1800 area toward the low-1.1500s, aligning with an Average Directional Index (ADX) above 36 that signals firm trend strength to the downside. The Relative Strength Index (RSI) near 39 sits below the 50 line, reinforcing persistent selling pressure rather than oversold exhaustion.
Immediate resistance emerges at 1.1578, where a nearby horizontal level converges with the cluster of daily moving averages just above, followed by stronger resistance at 1.1766 and then 1.2082. On the downside, initial support is seen at 1.1491, ahead of 1.1469, with a deeper floor at 1.1392 if sellers extend control. A daily close back above 1.1578 would ease immediate pressure and open a recovery toward 1.1766, while sustained trading below 1.1491 would keep the bearish tone intact and expose the lower support band.
(The technical analysis of this story was written with the help of an AI tool.)
Bottom line: USD still in control
For now, EUR/USD is being driven far more by developments in Washington than by events in Frankfurt.
Until the Fed’s policy path becomes clearer, or the euro area shows a more convincing cyclical rebound, rallies are likely to remain capped.
At this stage, the US Dollar remains firmly in the driving seat.
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.
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
