EUR/USD Price Forecast: Bearish bias persists beneath key technical resistance as pair falls below 1.1200

• Selling pressure leaves EUR/USD near 1.1195 in early European trade on Friday.
• Trading below the 100-day SMA keeps the pair’s outlook bearish, reinforced by negative RSI momentum.
• While 1.1255 marks the nearest resistance, the initial downside objective stands at 1.1132.

A weaker tone prevails in EUR/USD, with the pair hovering around 1.1195 in Friday’s early European session. Caution could build as the day progresses, with German Industrial Production, Eurozone Retail Sales and US employment figures all scheduled for release later on Friday.

Following a global sell-off in AI stocks, demand for safe-haven assets could lend the US dollar (USD) some support against the Euro (EUR). Dilin Wu, research strategist at Pepperstone, said: "The dollar is getting some support from safe-haven demand."

At the same time, traders are trimming expectations of additional Fed rate increases following the Democrats’ win in the US midterm elections. According to the CME FedWatch tool, Fed funds futures now imply around a 70.9% chance of a 25-basis-point rate hike in December, down from more than 82.7% on Wednesday.

Attention on Friday will centre on US employment figures for possible clues to the Fed’s interest rate trajectory. September’s US Nonfarm Payrolls (NFP) report is expected to show 65,000 job additions, while the Unemployment Rate is forecast to hold steady at 4.2% for the same period.

How is Euro inflation data anchoring swaps as Eurozone yields fall?

With few data releases in yesterday’s session, Deutsche Bank analysts point to one notable exception: “although we did get the Euro Area flash CPI print for October.” The figures, they say, “came in as expected by the consensus, with headline inflation up to a 3-year high of +4.0% in October, whilst core inflation remained at +2.5%.” Turning to bond markets, Deutsche Bank notes that “yields on 10yr bunds (-5.8bps) fell to 3.27%, whilst 10yr OATs (-17.6bps) saw their biggest daily decline since April, falling to 4.77%.” The decline, the analysts add, “also pushed the Franco-German 10yr spread down by -11.8bps to 150bps, marking its tightest level in the last couple of weeks.” They underline the resulting repricing of inflation expectations: “that led to a huge decline in inflation expectations, with the Euro 1yr inflation swap (-25.9bps) down to a two-month low of 3.10%, whilst the 1yr US inflation swap (-24.9bps) hit a two-month low of 2.16%.”

What do Lagarde’s inflation and tariff warnings mean for the Euro?

A slightly hawkish tilt emerges from ECB President Lagarde’s speech, which receives a score of 6.2/10 on FXS Speechtracker against a historical average of 5.6/10. Her emphasis that it is “still necessary to apply tools to avoid inflation running away”, alongside the challenge of distinguishing supply shocks from demand shocks, suggests that the European Central Bank remains wary of easing policy. That stance offers modest support to the Euro.

Any pronounced bullish response in the Euro is tempered by continuing uncertainty over trade and growth. Lagarde said US tariffs were unlikely to be reconsidered soon and that US mid-term votes might influence them only gradually. Her reference to the opposing effects of the energy shock and AI also points to a complicated macroeconomic environment. This suggests that the ECB will look to incoming indicators between now and December, leaving the Euro responsive to data releases and policy news.

Technical Analysis: Can EUR/USD shake off its bearish bias below the 100-day SMA?

Below the 100-day simple moving average (SMA), EUR/USD’s daily chart continues to signal a bearish near-term setup. Trading just above the 20-day Bollinger middle band suggests tentative buying interest near current levels. However, the Relative Strength Index (14), at 44, remains under the neutral threshold of 50, indicating that recovery momentum is limited within the broader downward bias.

A recovery would first encounter the upper Bollinger band near 1.1255, before reaching the 28 July low of 1.1353 and the stronger hurdle at the 100-day SMA, around 1.1415. Sustained buying beyond that level could extend the advance towards the 7 August high of 1.1581. 

The lower Bollinger band near 1.1132 provides the nearest support. Should this zone give way, the psychological mark of 1.1100 would come into view, ahead of the 12 May 2025 low of 1.0951. 

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