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

EUR/USD advances towards 1.1160 as Monday’s European session gets under way.
Trading below the 100-day SMA leaves the pair’s bearish outlook intact.
While 1.1190 marks the nearest upside hurdle, 1.1125 is the first support to monitor.

EUR/USD gains ground near 1.1160 in early European trade on Monday, with the Euro (EUR) drawing some support against the US Dollar (USD) from the European Central Bank’s (ECB) hawkish stance.

After the ECB left interest rates unchanged in October, President Christine Lagarde said last week that policymakers were examining indicators to assess whether a rate increase would be justified next month. "We will have many indicators between now and December that will really help us determine whether a hike is necessary," Lagarde said.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

However, an improving US labour market could support the Greenback and weigh on the major currency pair. Above-forecast job additions of 165,000 in October compared with 60,000 in September, while October’s unemployment rate declined to 4.1%. The figures have strengthened expectations of continued labour-market resilience, keeping the Federal Reserve (Fed) on course for an interest rate increase in December.

Why is the Euro under pressure as investors shift to Dollar cash?

Even the technology-led decline in US equities has not generated the anticipated buying interest in the Euro, according to ING analysts. They describe its recent showing as “a rather unimpressive performance,” observing that a “large US tech sell-off is still not enough to prompt much EUR/USD buying at all.” Although “the European buy-side is running low hedge ratios on its US investments,” they note that the expected demand for the single currency has not emerged.

ING attributes this to investors’ willingness to retain 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 also cite “the return to more familiar correlations, where US Treasuries are now performing their safe haven role.”

For the period ahead, ING’s view is that, “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.” Regarding monetary policy, 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.”

Do tariff and inflation risks reinforce Lagarde’s hawkish bias?

A slightly firmer policy tone emerged from ECB President Lagarde’s speech, which registered 6.2/10 on FXS Speechtracker against a historical baseline of 5.6/10. Her emphasis 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. At the same time, Lagarde recognises how difficult it is to separate supply shocks from demand shocks.

Persistent external risks to Euro-area price pressures were evident in remarks that US tariffs are unlikely to be reconsidered soon and that US mid-term votes could eventually influence trade policy. An environment in which an energy shock and AI exert opposing forces adds to monetary policy uncertainty. Nevertheless, the commitment to counter inflation points to downside risks for the Dollar against the Euro if markets factor in relatively tighter ECB policy.

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

A bearish near-term outlook persists on the EUR/USD daily chart. Spot remains beneath both the 20-day Bollinger simple moving average and the 100-day simple moving average (SMA), suggesting that the broader trend continues to face a ceiling. Rebound attempts also appear limited as the price stays below the upper Bollinger band. Meanwhile, a Relative Strength Index (RSI) reading of around 41 indicates mildly negative momentum, though not oversold conditions.

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

For declines, the lower Bollinger band provides the nearest support at approximately 1.1125. A decisive move below it would clear the path towards the psychological 1.1100 mark and then the 12 May 2025 low of 1.0951.

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

Common questions about the Euro

Which countries use the Euro, and how widely is it traded?

Second only to the US Dollar in global trading activity, the Euro serves as the currency of the 20 European Union countries within the Eurozone. Its share of all foreign exchange transactions stood at 31% in 2022, with average daily turnover exceeding $2.2 trillion. An estimated 30% of all transactions involve EUR/USD, making it the world’s most actively traded currency pair. It is followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

How does the ECB’s role affect the Euro?

Interest rates and monetary policy for the Eurozone are managed by the European Central Bank (ECB), its reserve bank based in Frankfurt, Germany. Maintaining price stability is the ECB’s principal mandate, whether through controlling inflation or encouraging growth. Raising or cutting interest rates is its main policy instrument. The Euro generally benefits from relatively high rates, or expectations of higher rates, while the reverse also holds. Monetary policy is decided by the ECB Governing Council at eight meetings each year. The decision-makers comprise the heads of Eurozone national banks and six permanent members, among them ECB President Christine Lagarde.

Why do inflation figures matter for the Euro?

The Harmonised Index of Consumer Prices (HICP), which measures Eurozone inflation, is a key economic gauge for the Euro. Inflation that exceeds expectations, particularly when it is above the ECB’s 2% target, obliges the central bank to raise interest rates to bring price growth back under control. When the region’s interest rates are relatively high compared with those of its counterparts, global investors find it more attractive to place their money there. This generally supports the Euro.

Why does economic data move the Euro?

The Euro can react to data releases because they offer a measure of economic health. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys are among the indicators that can shape the single currency’s direction. Economic strength supports the Euro by drawing more foreign investment and potentially encouraging the ECB to raise interest rates, which would strengthen the currency directly. Conversely, weak economic readings are likely to weigh on the Euro. Particular attention is paid to figures from Germany, France, Italy and Spain, the euro area’s four largest economies, which together represent 75% of the Eurozone economy.

Why is the Trade Balance important for the Euro?

The gap between a country’s export earnings and import expenditure over a specified period is measured by the Trade Balance, another important release for the Euro. Strong demand for a country’s exports can lift its currency solely through the additional demand from overseas buyers purchasing those goods. A positive net Trade Balance therefore strengthens a currency, whereas a negative balance has the opposite effect.