EUR/USD Price Forecast: Bearish bias intact below 100-day EMA near 1.1550
The EUR/USD pair trades with mild losses near 1.1565 during the early European session on Wednesday. The US Dollar (USD) edges higher against the Euro (EUR) amid hopes that the US government shutdown may end soon.
  • EUR/USD posts modest losses around 1.1565 in Monday’s early European session.
  • Negative view of the pair prevails below the 100-day EMA, further downside cannot be ruled out with the bearish RSI. 
  • The first upside barrier emerges at 1.1575; the initial support level to watch is 1.1468.

The EUR/USD pair trades with mild losses near 1.1565 during the early European session on Wednesday. The US Dollar (USD) edges higher against the Euro (EUR) amid hopes that the US government shutdown may end soon. The Eurozone Sentix Investor Confidence report for November will be released later on Monday.

Reuters reported on Monday that the US Senate advanced the government funding bill to end the shutdown, moving it closer toward passage by voting 60-40 in first approval on extending the enhanced Affordable Care Act subsidies. The amended proposal would still have to be approved by the House of Representatives and sent to US President Donald Trump for signing, which could take several days.

Technically, the negative outlook of EUR/USD remains in place as the major pair remains capped below the key 100-day Exponential Moving Average (EMA) on the daily chart. Furthermore, the 14-day Relative Strength Index (RSI) stands below the midline near 44.95. This indicates that further downside looks favorable in the near term. 

A decisive break above the 100-day EMA at 1.1575 could invite fresh bullish momentum toward 1.1668, the high of October 28. The next hurdle is seen in the 1.1700-1.1705 zone, representing the psychological level and the upper boundary of the Bollinger Band.

On the downside, the initial support level for the major pair is located at 1.1468, the low of November 5. More bearish candles could set the stage for a downside move that takes the price to 1.1403, the low of July 31. The additional downside filter to watch is 1.1364, the low of June 3. 

EUR/USD daily chart

Euro FAQs

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%).

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.

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.

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.

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.

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