1.1100 gives way: EUR/USD Price Forecast remains negative below 100-day SMA

1.1080 is the approximate level EUR/USD retreats to early in Thursday’s European session.
Below the 100-day SMA, the pair retains a bearish bias, reinforced by negative RSI momentum.
At 1.1090-1.1100 lies the first resistance zone, while 1.1000 provides initial support.

1.1080 is the approximate level EUR/USD falls to early in Thursday’s European trading. The Euro (EUR) faces pressure against the US Dollar (USD) from the European Central Bank’s (ECB) cautious approach. Although energy prices may be declining, ECB policymaker Philip Lane said interest rate decisions would hinge on the extent to which the recent jump in fuel costs feeds through to wages and other prices.

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

Meanwhile, a stronger-than-expected US inflation release and remarks from Fed governor Christopher Waller have fuelled expectations of a 50-basis-point Federal Reserve (Fed) rate increase in December. Waller said he would back a quarter-point increase that month, but could favour a half-point rise if inflation figures exceed expectations.

Friday’s US October Producer Price Index (PPI) release is the next focus for traders seeking guidance on the interest rate outlook. Forecasts put headline PPI growth at 6.6% YoY in October and core PPI growth at 5.0% YoY for the same reporting period.

EUR/USD1.10 in view as ECB caution weighs against Fed tightening

Rabobank strategists see divergent policy prospects weighing on the Euro. They observe that “the Fed is not the only G10 central bank widely expected to hike rates in December,” describing the ECB as “among those banks also likely to tighten policy.” Their qualification is that “the ECB, however, could prove to be reluctant to hike rates beyond December,” citing indications from “the last ECB press conference” that “suggested that the GC were becoming increasingly concerns about the growth outlook.” Rabobank’s assessment is that “market pricing for 2027 ECB rate rises remains too aggressive,” while the strategists also warn that “another factor that could weigh on the EUR in the coming months are uncertainties about what a far-right president in France could mean for EU cooperation going forward.” On that basis, they “forecast a move to EUR/USD1.10 on a 3-month view.”

6.2/10 for Lane: consensus and inflation lags offer modest Euro support

At 6.2/10, Lane’s FXS Speechtracker score is in line with his historical average. It indicates a broadly neutral impact with a mildly hawkish bias. His emphasis on a “high premium on consensus” and a “high bar on directional forward guidance” points to an ECB unwilling to commit in advance to a policy course. At the same time, it seeks flexibility through instruments addressing “multiple equilibriums” in the bond market, potentially helping to stabilise the Euro.

Concern over persistent price pressures is evident in Lane’s use of underlying inflation to assess inflation one year ahead, alongside his expectation of second-round effects, even as energy prices retreat. Underlying inflation could rise despite a decline in the headline measure. That prospect supports caution over monetary easing and offers modest support for the Euro, as markets may anticipate rate cuts proceeding more slowly and subject to more conditions.

Technical Assessment: 100-day SMA caps EUR/USD as bearish bias persists

EUR/USD’s daily chart retains a distinctly bearish profile, with the pair extending its decline below every visible moving-average and volatility benchmark. Well above the current price, the 100-day simple moving average (SMA) continues to cap the medium-term outlook. Trading below the lower Bollinger Bands (20, 2) boundary also signals sustained selling pressure near recent lows. Although the Relative Strength Index (14) has rebounded to 36, it is still beneath the neutral 50 threshold. The recovery therefore suggests only limited momentum relief against a broadly weak backdrop.

The lower Bollinger band and the psychological level define the first resistance area at 1.1090-1.1100. Continued buying beyond this zone could open a route towards the middle band at 1.1180. Further upside targets are the upper Bollinger band at 1.1275 and the 100-day SMA at 1.1405.

For support, the major pair looks first to the 1.1000 round number. A sustained break below it could bring the 12 May 2025 low of 1.0951 into play, ahead of the 27 May 2025 low of 1.0733.

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

Euro: key questions answered

20 EU countries use the Euro: what is it?

Across the 20 European Union countries forming the Eurozone, the Euro serves as the common currency. Only the US Dollar is traded more heavily worldwide. The Euro represented 31% of all foreign exchange transactions 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. Next come EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The ECB’s role in setting policy and influencing the Euro

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank, setting interest rates and directing monetary policy. Maintaining price stability is its central mandate, whether through curbing inflation or supporting growth. Adjusting interest rates upwards or downwards is its main policy instrument. The Euro typically benefits from relatively high rates or expectations of rate increases; the reverse also applies. Monetary policy is determined by the ECB Governing Council at eight meetings each year. The decision-makers are the heads of the Eurozone’s national central banks and six permanent members, among them ECB President Christine Lagarde.

2% inflation target: how price data affects the Euro

For the Euro, a key economic measure is Eurozone inflation, tracked through the Harmonised Index of Consumer Prices (HICP). An inflation reading above expectations, particularly one exceeding the ECB’s 2% target, requires the central bank to raise rates to regain control of price growth. By making the region a more attractive destination for global investment, interest rates above those of other economies generally support the Euro.

75% of Eurozone output: why economic releases matter for the Euro

Economic releases provide a reading of economic health and can move the Euro. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys all help shape the single currency’s direction. Economic strength supports the Euro by drawing in foreign investment. It may also prompt the ECB to raise interest rates, directly strengthening the currency. Weak economic readings, by contrast, are likely to push the Euro lower. Particular weight falls on figures from Germany, France, Italy and Spain, the euro area’s four largest economies. Together, they represent 75% of the Eurozone economy.

Trade Balance: how exports and imports shape the Euro

The Trade Balance is another closely watched release for the Euro. Over a specified period, it compares a country’s export earnings with its spending on imports. Strong overseas demand for a country’s exports creates additional demand for its currency as foreign buyers purchase those goods, lifting its value. A positive net Trade Balance therefore supports a currency, while a negative balance has the opposite effect.