EUR/USD Price Forecast: Bearish bias persists below 100-day SMA despite gains above 1.1150

• At close to 1.1160, EUR/USD edges higher in early European trading on Monday.
• Trading below the 100-day SMA leaves the pair’s outlook bearish.
• Resistance initially stands at 1.1190, while 1.1125 marks the first support to monitor.

Around 1.1160, EUR/USD is posting gains in Monday’s early European session, with the European Central Bank’s (ECB) hawkish stance lending some support to the Euro (EUR) against the US Dollar (USD).

Having left interest rates unchanged in October, the ECB is assessing indicators to judge whether an increase will be justified next month, President Christine Lagarde said last week. "We will have many indicators between now and December that will really help us determine whether a hike is necessary," said Lagarde.

US employment rose by 165,000 in October, exceeding forecasts and up from 60,000 in September, while the unemployment rate declined to 4.1%. Evidence of an improving US labour market could support the Dollar and weigh on the pair. The figures have strengthened expectations of continued labour-market resilience, keeping the Federal Reserve (Fed) on course for an interest rate rise in December.

Euro remains under pressure as investors shift into Dollar cash

Despite low hedge ratios on European investors’ US holdings, the anticipated buying of the single currency has not materialised, ING analysts note. Describing the Euro’s recent showing as “a rather unimpressive performance,” they observe that a “large US tech sell-off is still not enough to prompt much EUR/USD buying at all.” In their assessment, “the European buy-side is running low hedge ratios on its US investments,” but this has not translated into the expected Euro demand.

ING attributes this to investors retaining Dollar cash: “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.” The analysts say this pattern is being supported by “the return to more familiar correlations, where US Treasuries are now performing their safe haven role.”

For the near-term outlook, ING says, “barring a soft US jobs report today, expect EUR/USD to consolidate not far from 1.12,” while the Eurozone focus also includes “ECB Chief Economist Philip Lane at 10:30 CET.” Turning to policy expectations, the analysts note 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’s hawkish tone supports Euro as tariff and inflation risks persist

A reading of 6.2/10 on FXS Speechtracker placed ECB President Lagarde’s speech modestly above the historical baseline of 5.6/10, indicating a slightly firmer policy tone. Her insistence that it is “still necessary to apply tools to avoid inflation running away”, alongside plans to assess numerous indicators before December, suggests a hawkish bias for the Euro. That is despite her acknowledgement of the difficulty in separating supply shocks from demand shocks.

Persistent external risks could keep price pressures elevated in the Euro area, judging by remarks that US tariffs are unlikely to be reconsidered soon and that US mid-term votes could eventually influence trade policy. Describing energy shocks and AI as opposing forces in the current environment highlights the uncertainty facing policymakers. Nevertheless, the commitment to counter inflation points to downside risks for the Dollar against the Euro if markets price in comparatively tighter ECB policy.

Technical Analysis: EUR/USD remains bearish below the 100-day SMA

Below both the 20-day Bollinger simple moving average and the 100-day simple moving average (SMA), EUR/USD retains a bearish short-term bias on the daily chart, suggesting that the broader trend remains constrained. The pair also sits beneath the upper Bollinger band, consistent with limited recovery attempts. Meanwhile, a Relative Strength Index (RSI) reading of around 41 indicates mildly negative momentum, though not oversold conditions.

Any advance would first encounter resistance around 1.1190 at the 20-day Bollinger SMA, ahead of the upper Bollinger band near 1.1260. Beyond that, the low of 24 June at 1.1325 presents the next obstacle, followed by the 100-day SMA at 1.1412. 

The lower Bollinger band, at approximately 1.1125, provides immediate downside support. A decisive breach would bring the psychological 1.1100 level into view, with the low of 12 May 2025 at 1.0951 next in line. 

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