EUR/USD Price Forecast: Strong recovery from 100-day MA ahead of US NFP data

EUR/USD clings to gains near 1.1630 as Fed’s Waller is seen supporting holding interest rates steady this month.
Fed’s Waller said he is finally seeing some signs of progress in inflationary pressures.
Investors keenly await the US NFP data for August.

Sagar Dua FXStreet

The Euro (EUR) holds onto previous day’s gains at around 1.1630 against the US Dollar (USD) during the Asian trading session on Friday. The major currency pair gained significantly on Thursday as the US Dollar faced sharp selling pressure, following dovish remarks from Federal Reserve (Fed) Governor Christopher Waller.

At press time, the US Dollar Index (DXY), which gauges the Greenback's value against six major currencies, trades close to Thursday’s low near 99.00.

On Thursday, Fed’s Waller said in the Reuters NEXT Newsmaker event that he would support holding the policy rate steady at the September policy meeting if August inflation data shows progress towards the 2% target.

Fed’s Waller didn’t rule out the possibility of hiking interest rates this month if inflation figures come in hot, but his remarks that he is “finally seeing some signs of disinflation in recent data”, indicated that he could incline towards maintaining the status quo.

Meanwhile, investors await key United States (US) Nonfarm Payrolls (NFP) data for August, which will be published at 12:30 GMT.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1630. The pair holds above the 100-day simple moving average (SMA) at 1.1564, keeping the near-term bias mildly bullish as recent gains remain supported by this underlying trend indicator.

The Relative Strength Index (RSI) around 57 suggests positive but not overstretched momentum, hinting that buyers retain the upper hand while avoiding overbought conditions.

On the downside, initial support is seen at the 100-day SMA near 1.1564, where a break would expose a deeper pullback toward prior daily lows. Looking up, the major currency pair could extend its upside towards the August high at 1.1720.

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

Euro FAQs

What is the Euro?

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%).

What is the ECB and how does it impact the Euro?

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.

How does inflation data impact the value of the Euro?

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.

How does economic data influence the value of the Euro?

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.

How does the Trade Balance impact the Euro?

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

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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