EUR/USD Price Forecast: Rebounds above 1.1350, but outlook stays bearish below key resistance

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EUR/USD gains ground to near 1.1370 in Thursday’s early European session.
The bearish outlook of the major pair remains intact below the key 100-day SMA, with oversold RSI momentum.
The initial support level to watch is 1.1350; the first upside barrier is seen at 1.1411.

The EUR/USD pair trades in positive territory around 1.1370 during the early European session on Thursday. A surprisingly hawkish message from Kevin Warsh as the new Federal Reserve (Fed) chair last week has traders pricing a US hike as soon as September. Markets might turn cautious later in the day ahead of the key US Personal Consumption Expenditures (PCE) report.

The headline PCE is expected to show a rise of 4.1% YoY in May, versus 3.8% prior, while the core PCE is projected to show an increase of 3.4% YoY in May, compared to 3.3% in April. If the reports show hotter-than-expected outcomes, this could reinforce the expectation of US interest rate hikes later this year and underpin the US Dollar (USD) against the Euro (EUR).

Technical Analysis:

In the daily chart, EUR/USD extends its decline below the 20-day Bollinger simple moving average and remains well under the 100-day moving average, keeping the broader tone decisively bearish. Price is only slightly above the lower Bollinger Band support at 1.1351, while the Relative Strength Index (14) at 28.3 slips into oversold territory, hinting at stretched downside conditions but not yet signaling a firm rebound.

On the downside, immediate support is located at the lower Bollinger Band around 1.1350, where a sustained break would open the door to further losses toward the 1.1300 psychological level. On the topside, initial resistance emerges at the March 13 low of 1.1411, en route to the 20-day Bollinger middle band near 1.1530 and the 100-day moving average at 1.1650. Only a recovery above this layered resistance zone would start to ease the current bearish pressure.

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

Euro FAQs

What is the Euro?

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%).

What is the ECB and how does it impact the Euro?

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.

How does inflation data impact the value of the Euro?

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.

How does economic data influence the value of the Euro?

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.

How does the Trade Balance impact the Euro?

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.