EUR/USD Price Forecast: Falls toward 1.1650 after retreating from moving averages
- EUR/USD may fall toward the six-week low of 1.1589.
- The 14-day Relative Strength Index is at 42.69, reinforcing a bearish bias.
- The pair pulled back from the immediate resistance at the 50-day EMA of 1.1679.
EUR/USD edges lower after registering modest gains in the previous session, trading around 1.1660 during the Asian hours on Monday. The 14-day Relative Strength Index (RSI) momentum indicator at 42.69 sits below the 50 midline and is easing, confirming a bearish tilt. RSI near 43 keeps sellers in control without reaching oversold, suggesting consolidation could precede follow-through.
The technical analysis of the daily chart shows that the nine-day Exponential Moving Average (EMA) is slipping, while the 50-day EMA has flattened, leaving price beneath both and capping rebounds. The absence of a bearish cross, with the short-term average still marginally above the medium-term average, underscores a fading but not broken uptrend, with narrowing spreads signaling waning momentum.
On the downside, the EUR/USD pair may navigate the region around the six-week low of 1.1589, set on December 1. A break below this level would expose the next base around 1.1468, the lowest level since August 2025.
The immediate resistance lies at the 50-day EMA of 1.1679, aligned with the nine-day EMA at 1.1681. A daily close above the averages would revive the momentum and support the EUR/USD pair to target the three-month high of 1.1808, which was recorded on December 24, followed by the 1.1918, the highest level since June 2021.
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.
(The technical analysis of this story was written with the help of an AI tool.)
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