EUR/USD Price Forecast: Gains ground above 1.1150, while retaining bearish bias below 100-day SMA
- EUR/USD gathers strength to near 1.1160 in Monday’s early European session.
- The pair keeps a bearish outlook, with the price holding below the 100-day SMA.
- The first upside barrier emerges at 1.1190; the initial support level to watch is 1.1125.
The EUR/USD pair trades in positive territory around 1.1160 during the early European trading hours on Monday. A hawkish stance from the European Central Bank (ECB) provides some support to the Euro (EUR) against the US Dollar (USD).
ECB President Christine Lagarde said last week that the central bank is looking at indicators to see if an interest rate hike will be warranted next month, after it held rates steady in October. "We will have many indicators between now and December that will really help us determine whether a hike is necessary," said Lagarde.
On the other hand, signs of improvement in the US labor market might lift the Greenback and create a headwind for the major pair. The US economy added 165,000 jobs in October, compared to 60,000 recorded in September, beating estimates. Meanwhile, the unemployment rate fell to 4.1% in October. These figures have reinforced expectations that the labor market remains resilient and keeps the Federal Reserve (Fed) on track for a December interest rate increase.
Euro stays on the back foot as investors rotate into Dollar cash
Analysts at ING characterise the Euro’s latest showing as “a rather unimpressive performance,” noting that even a “large US tech sell-off is still not enough to prompt much EUR/USD buying at all.” They point out that “the European buy-side is running low hedge ratios on its US investments,” yet the expected demand for the single currency has failed to materialise.
According to ING, “global investors are more than happy to leave their cash in dollars for the time being. In other words, we are seeing a rotation into cash and not out of the dollar.” They add that this is being reinforced by “the return to more familiar correlations, where US Treasuries are now performing their safe haven role.”
Looking ahead, ING argues that, “barring a soft US jobs report today, expect EUR/USD to consolidate not far from 1.12,” with attention in the Eurozone also on “ECB Chief Economist Philip Lane at 10:30 CET.” On the policy front, they highlight that “the market still prices 18bp of ECB hikes in December and that should remain sticky unless we see a much deeper equity correction.”
Lagarde leans hawkish as tariffs and inflation risks stay in focus
ECB President Lagarde’s speech scored 6.2/10 on FXS Speechtracker, modestly above the historic 5.6/10 baseline and signaling a slightly stronger policy tone. Emphasis that it is “still necessary to apply tools to avoid inflation running away” and that many indicators will be assessed before December points to a hawkish bias for the Euro, even as Lagarde acknowledges the difficulty of disentangling supply and demand shocks.
Comments that US tariffs are unlikely to be revisited quickly and that US mid-term votes may eventually affect trade policy highlight lingering external risks that could sustain Euro-area price pressures. The description of the current environment as shaped by an energy shock and AI pulling in opposite directions underscores policy uncertainty, but the commitment to act against inflation suggests downside risks for the Dollar versus the Euro if markets price in relatively tighter ECB policy.
Technical Analysis: EUR/USD retains a negative bias under the 100-day SMA
In the daily chart, EUR/USD maintains a bearish near-term bias, with spot holding below the 20-day Bollinger simple moving average and the 100-day simple moving average (SMA), which suggests the broader trend remains capped. Price is also trading beneath the upper Bollinger band, reinforcing the notion of contained rebound attempts, while the Relative Strength Index (RSI) around 41 hints at modestly negative momentum without reaching oversold conditions.
On the topside, initial resistance level is located at the 20-day Bollinger SMA around 1.1190, en route to the upper boundary of Bollinger band near 1.1260. Further north, the next hurdle is seen at the June 24 low of 1.1325, and then the 100-day SMA at 1.1412.
On the downside, immediate support level is offered by the lower limit of Bollinger band at approximately 1.1125. A clear break beneath this floor would open the way for the 1.1100 psychological level, followed by the May 12, 2025 low of 1.0951.
(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.