EUR/USD Price Forecast: Holds steady near 1.1450, bearish tone remains intact
- EUR/USD flatlines around 1.1465 in Thursday’s early European session.
- The negative tone of the pair remains intact below the 100-day, with bearish RSI momentum.
- The immediate resistance level is seen at 1.1485; the first downside target to watch is 1.1377.
The EUR/USD pair trades on a flat note around 1.1465 during the early European trading hours on Thursday. Traders continue to assess the latest interest rate hike decision by the US Federal Reserve (Fed). The US Initial Jobless Claims report is due later on Thursday.
The Fed raised the interest rates by a quarter-percentage point at its September meeting on Wednesday and flagged more hikes in the coming months.
Fed Chair Kevin Warsh joined a unanimous decision to lift interest rates, while officials validated a hawkish path and projected one more increase later this year. Hawkish tone from the Fed could provide some support to the Greenback and create a headwind for the major pair.
"(Warsh) definitely sounded more hawkish than expected, and the fact that he provided guidance on future hikes surprised the markets, causing them to reprice policy higher, which ultimately pushed the dollar higher," said Carol Kong, currency strategist at Commonwealth Bank of Australia.
The European Central Bank (ECB) also delivered a 25 bps rate hike last week. The central bank reiterated it won’t pre-commit to further steps after raising rates for a second time since the Iran war started. ECB President Christine Lagarde said that Eurozone inflation will stay elevated for some time and acknowledged the split with rates pricing.
USD strength seen as temporary as Fed hike fails to out-hawk market pricing
According to TD Securities, the Fed "met market expectations with a 25bp rate hike and hawkish SEP projections," with the Committee appearing "ready to deliver more hikes." However, the bank cautions that the "USD rally is more likely to be a fade than not," arguing that the "median Fed dot plot forecast is not out-hawking existing market pricing," that "scope for the Fed to tighten monetary policy is limited in the absence of new shocks," and that "growth in rest of the world remains resilient."
Fed’s sober move reinforces hawkish bias, supports Dollar
Warsh’s press conference tone was distinctly hawkish, with the FXS Speechtracker score at 7.4/10, modestly above the 7/10 historical average and underscoring a firmer stance on inflation. By stressing that “we decided to remove a dose of accommodation” because the economy has strengthened and “inflation is the problem,” Warsh framed today’s action as a deliberate step toward price stability, signaling scope for further tightening if trends persist. Emphasis on full employment, the ability to “afford to focus on price stability,” and the dismissal of any single data point as decisive collectively point to a data-trend-driven, resolutely anti-inflation posture that is supportive for the Dollar.
The FXS Fed Sentiment Index jumped by +26.07 points to 151.79, firmly in hawkish territory and consistent with the above-baseline FXS Speechtracker score. This sharp move higher in the FXS Fed Sentiment Index confirms that today’s messaging materially strengthened the perceived hawkish bias of the Fed, reinforcing expectations for tighter policy and underpinning Dollar resilience.
Technical Analysis: EUR/USD maintains a negative outlook in the near term
In the daily chart, EUR/USD keeps a bearish near-term bias as spot holds below all major reference lines. The 100-day simple moving average (SMA), together with the Bollinger Bands (20, 2) middle band sits overhead and suggests the pair remains under broader downside pressure, while even the lower Bollinger band now acts as initial resistance. The Relative Strength Index (14) at 32.29 hovers near oversold territory, hinting that while selling momentum is stretched, bears still control the short-term structure.
On the topside, immediate resistance is located at the former lower Bollinger band near 1.1485, followed by the 100-day SMA at 1.1550, which reinforces the idea of a capped recovery if price attempts a bounce. Above there, the Bollinger middle band at 1.1605 and the upper band at 1.1720 mark subsequent resistance layers, defining a broader supply zone that EUR/USD would need to reclaim to ease the current bearish tone; with no meaningful supports below the market in this dataset, further slippage would leave the pair vulnerable to fresh lows beyond the recent break.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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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