EUR/USD Price Forecast: Consolidates below key Fibonacci level as bulls defend 200-day SMA

• EUR/USD rises as US Dollar weakens amid possible Japanese FX intervention.
• Technically, EUR/USD holds above the 200-day SMA on the daily chart, keeping a mild bullish bias.
• The pair struggles below the 50% Fibonacci retracement at 1.1747.

The Euro (EUR) edges higher against the US Dollar (USD) on Tuesday as the Greenback softens broadly following possible intervention from Tokyo, with authorities seen selling Dollars to support the Japanese Yen (JPY), while the Euro also draws some support from the latest monetary policy decision by the European Central Bank(ECB).

At the time of writing, EUR/USD is trading around 1.1726 up nearly 0.42%. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.16, down about 0.80% on the day.

The European Central Bank left all three key interest rates unchanged, in line with expectations. The bank said the Middle East conflict is pushing energy prices higher, lifting inflation while weighing on growth. It will stay data-dependent and decide policy meeting by meeting, while remaining committed to ensuring inflation stabilizes at the 2% target in the medium term.

Earlier in the day, preliminary data showed that the Harmonized Index of Consumer Prices (HICP) rose 3.0% YoY in April, accelerating from 2.6% in March and marking the highest level since September 2023, largely driven by energy prices.

ECB President Christine Lagarde said a rate hike was discussed extensively and the decision to hold was unanimous. Markets are pricing in two to three rate hikes this year, though traders remain cautious about whether the central bank can hike aggressively given the Eurozone’s exposure to energy shocks.

Technical Analysis:

In the daily chart, EUR/USD holds above the 200-day Simple Moving Average (SMA) at 1.1676, keeping a mild bullish bias while it consolidates just under the 50.0% Fibonacci retracement at 1.1747 of the move from the January high to the March low. The Relative Strength Index (14) at 54.4 leans slightly positive without signalling overbought conditions, whereas the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory, hinting that upside momentum is losing some traction as the broader trend strength, reflected by an Average Directional Index (ADX) near 22.2, remains modest.

On the topside, immediate resistance is located at the 50.0% Fibonacci retracement at 1.1747; a sustained break higher would open the door toward the 38.2% retracement at 1.1826, followed by the 23.6% level at 1.1924. On the downside, initial support is seen at the 200-day SMA at 1.1676, closely backed by the 61.8% Fibonacci level at 1.1667, while deeper losses would expose the 78.6% retracement at 1.1555 ahead of the 100.0% Fibonacci anchor near 1.1411.

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