EUR/USD Price Forecast: Extends the recent rally to near 1.1650 amid bullish signal

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The EUR/USD pair extends its upside to around 1.1635 during the Asian trading hours on Wednesday. Signals that the European Central Bank (ECB) is done cutting interest rates provide some support to the Euro (EUR) against the US Dollar (USD).

EUR/USD strengthens to near 1.1635 in Wednesday’s Asian session.
The major pair keeps the bullish vibe unchanged above the key 100-EMA.
The first upside barrier emerges at 1.1652; the initial support level is located at 1.1580.

The ECB is anticipated to keep its deposit rate steady at 2.0% again this month, with most analysts expecting rates to stay where they are through 2026, according to Bloomberg.

Looking ahead, traders will keep an eye on the US ADP Employment Change and ISM Services PMI data later on Wednesday. These reports could offer some hints about the labor market and the US economy.

Technical Analysis:

In the daily chart, EUR/USD trades at 1.1635. Price holds above the 100-EMA at 1.1578 and the average is turning higher, keeping the recovery bias intact. Bollinger Bands have contracted and price sits just below the upper band, pointing to steady bullish pressure amid reduced volatility. Immediate resistance stands at the upper band at 1.1652, while initial support rests at the middle band at 1.1580.

RSI at 58.9 is firm above the 50 midline, confirming improving upside momentum. A daily close above 1.1652 would trigger band expansion and extend the advance, whereas failure to break higher could pull the pair back toward the lower Bollinger Band at 1.1507. Bias stays bullish while above the 100-EMA, and dips could find demand near the mid-band.

(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.