EUR/USD Price Forecast: Double bottom takes shape as buyers regain control
- EUR/USD climbs above 1.1200 as US midterm election results weigh on the US Dollar.
- The pair forms a potential double bottom near 1.1100, with buyers testing neckline resistance at 1.1250-1.1270.
- RSI and MACD signal improving momentum, though the longer-term SMAs remain overhead.
EUR/USD attracts fresh buyers on Wednesday as the US midterm election results rattle the US Dollar (USD), helping the Euro (EUR) reclaim 1.1200. The technical picture also improves, suggesting bulls are regaining a foothold after the pair touched 1.1104 last week, its lowest level since May 2025. At the time of writing, EUR/USD trades around 1.1257, up more than 0.50% on the day.
On the daily chart, EUR/USD has formed a potential double bottom near 1.1100, with the latest advance testing the neckline at 1.1250–1.1270. The pair has also climbed above the 21-day Simple Moving Average (SMA) at 1.1196, giving buyers some short-term control, although it remains below the 100-day and 200-day SMAs.
Momentum is improving, with the Relative Strength Index (RSI 14) near 52 and the Moving Average Convergence Divergence (MACD) turning positive and extending above its signal line. These signals support the recovery, but a broader bullish reversal remains unconfirmed while price holds below the longer-term averages.
A sustained break above the neckline would confirm the double-bottom pattern and open the way toward 1.1350, where previous support could now act as resistance. Further hurdles stand at the 100-day SMA at 1.1421 and the 200-day SMA at 1.1548. A break above these averages would weaken the broader bearish outlook.
On the downside, the 1.1200 mark offers initial support alongside the 21-day SMA. A break below this area would weaken the recovery and bring the 1.1100 base back into focus. A sustained move below that base would invalidate the double-bottom setup and leave EUR/USD vulnerable to further losses.
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.