EUR/USD Price Forecast: US Dollar on the back foot despite encouraging growth data

EUR/USD Current price: 1.1785

• The US economy expanded at an annualized pace of 4.3% in the three months to September.
• The ADP Employment Change 4-week average showed the employment sector continued to recovery early December.
• EUR/USD trades near the 1.1800 mark and aims to extend its advance.

The EUR/USD pair flirted with the 1.1800 mark during European trading hours on Tuesday. The FX board is all about US Dollar (USD) weakness, with the American currency losing ground against all major rivals. Middle East tensions alongside tinned holiday conditions exacerbate the Greenback’s dominant bearish trend.

No relevant data came from Europe. As for the United States (US), the ADP Employment Change 4-week average showed that the private sector added an average of 11,500 jobs per week in the week ending December 6. The USD paused its slide but remained pressured despite the encouraging figure.

Finally, the country released the preliminary estimate of the Q3 Gross Domestic Product (GDP). According to the report released by the Bureau of Economic Analysis (BEA), the economy expanded at an annualized pace of 4.3% in the three months to September, much better than the 3.3% anticipated by market players.  The GDP Price Index, an inflation measure, however, jumped to 3.7% from the previous 2.1%, partially offsetting the positive headline. The news gave the Greenback some air, but the American currency retains its bearish tone after the release, barely correcting near-term overbought conditions.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair is bullish, holding on to modest intraday gains. The 4-hour chart shows that the 20-period Simple Moving Average (SMA) holds above the 100- and 200-period SMAs, with the longer measures rising and the 20 SMA turning mildly higher, in line with the dominant bullish trend. The 20 SMA at 1.1739 offers nearby dynamic support, ahead of the 100 SMA at 1.1692. The same chart shows that the Momentum indicator remains well above its midline but lost upward traction, while the Relative Strength Index (RSI) prints at 65, easing from near overbought territory. Overall, the risk skews to the upside, although some consolidation could be expected ahead of the next leg north.

In the daily chart, EUR/USD develops above all its moving averages. The 20-day SMA climbs above the 100- and 200-day SMAs, underscoring a firm bullish bias. Meanwhile, the Momentum indicator remains above its midline but has moderated from recent highs, indicating buying pressure is easing. The Relative Strength Index (RSI) hovers around 69, near overbought, which could cap immediate gains. The 20-day SMA at 1.1681 reinforces the support area seen in the shorter-term charts.

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