EUR/USD Forecast: Euro sellers step away as focus shifts to ECB
- EUR/USD holds near 1.1450 following Wednesday's sharp decline.
- Fed Chair Powell's hawkish tone boosted the USD.
- The ECB is widely anticipated to keep key rates unchanged.
After posting moderate gains on Monday and Tuesday, EUR/USD reversed its direction and declined sharply on Wednesday. The pair stays in a consolidation phase near 1.1450 in the European morning on Thursday as investors gear up for the European Central Bank's (ECB) policy decisions.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.22% | -0.08% | -0.16% | 0.12% | -0.62% | -0.35% | 0.31% | |
| EUR | 0.22% | 0.17% | 0.00% | 0.33% | -0.38% | -0.14% | 0.52% | |
| GBP | 0.08% | -0.17% | -0.02% | 0.16% | -0.55% | -0.30% | 0.42% | |
| JPY | 0.16% | 0.00% | 0.02% | 0.30% | -0.45% | -0.17% | 0.48% | |
| CAD | -0.12% | -0.33% | -0.16% | -0.30% | -0.77% | -0.46% | 0.20% | |
| AUD | 0.62% | 0.38% | 0.55% | 0.45% | 0.77% | 0.25% | 0.93% | |
| NZD | 0.35% | 0.14% | 0.30% | 0.17% | 0.46% | -0.25% | 0.63% | |
| CHF | -0.31% | -0.52% | -0.42% | -0.48% | -0.20% | -0.93% | -0.63% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The US Dollar (USD) gathered strength in the American session on Wednesday and forced EUR/USD to turn south.
The Federal Reserve (Fed) left the policy rate unchanged at the range of 3.5%-3.75% following the March meeting, as expected. The Summary of Economic Projections (SEP), published alongside the policy statement, showed that officials' projections imply a 25 basis-points (bps) rate cut in 2026 and another 25 bps cut in 2027, unchanged from the December SEP. Additionally, the publication showed that the end-2026 Personal Consumption Expenditures (PCE) inflation is now expected at 2.7%, compared to 2.4% in December's SEP.
In the post-meeting press conference, Fed Chair Jerome Powell reiterated that they will remain attentive to risks on both sides of the mandate but explained that they expect higher energy prices to push inflation up in the near term. On a more hawkish note, Powell said that rate cuts will not follow if the inflation progress stalls.
Later in the day, the ECB is expected to keep key rates steady. Comments from ECB President Christine Lagarde will be scrutinized by investors.
In case Lagarde suggests that they will need to consider a response in case rising Oil and Gas prices lift inflation, the Euro could gather strength with the immediate reaction and open the door for a rebound in EUR/USD. On the other hand, the pair is likely to stay on the back foot if Lagarde refrains from offering guidance or hints that they expect a limited impact on inflaion.
EUR/USD Technical Analysis:
The near-term bias is mildly bearish as the pair holds below the cluster of short- and medium-term Simple Moving Averages (SMAs) on the 4-hour chart, with the 20-period SMA near 1.1495 and the 50-period SMA around 1.1532 reinforcing overhead supply. Price action also remains capped beneath a well-defined descending resistance trend line from 1.1821 and below the 100- and 200-period SMAs near 1.1617 and 1.1724, underscoring the broader downside pressure. Bollinger Bands slope lower, and the latest close is situated in the lower half of the envelope, aligning with persistent selling interest. The Relative Strength Index (RSI) hovers in the low-40s, indicating bearish momentum but without oversold conditions, which leaves room for further downside extension.
Initial resistance emerges at 1.1500, where a horizontal barrier converges with the 20-period SMA, followed by a stronger cap at 1.1531, just below the recent swing highs around 1.1536 and in proximity to the upper half of the Bollinger Band range. A sustained break above this area would expose the 100-period SMA toward 1.1620, softening the current bearish tone. On the downside, immediate support is seen near 1.1400, a prior horizontal floor that aligns with the lower segment of the recent trading range, with a deeper level at 1.1340 if selling accelerates. A clear violation of 1.1400 would confirm a continuation of the downtrend within the four-hour structure.
(The technical analysis of this story was written with the help of an AI tool.)
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.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
