EUR/USD Price Forecast: Softens to near 1.1150, with bearish bias intact below 100-day SMA
- EUR/USD weakens to around 1.1165 in Tuesday’s early European session.
- The pair keeps a negative outlook below the 100-day SMA, with bearish RSI momentum.
- The initial support level is located at 1.1140; the first upside barrier to watch is 1.1215.
The EUR/USD pair trades in negative territory near 1.1165 during the early European session on Tuesday. The Euro (EUR) extends its downside against the US Dollar (USD) as France’s fiscal concerns renewed financial stress across the Eurozone. Traders will closely monitor the Federal Reserve (Fed) and European Central Bank (ECB) interest rate decisions later this week.
The Fed is anticipated to keep the benchmark interest rate unchanged on Wednesday. Traders are pricing in nearly 89.5% probability that policymakers will hold interest rates steady at the current target range of 3.75% to 4.0%, the CME FedWatch Tool showed.
"The fundamental issue with the euro hasn't changed and spreads have tightened," said Kit Juckes, chief global FX strategist at Societe Generale. "Euro is still vulnerable at this point because the growth outlook isn't good and energy prices are still elevated,” Kit added.
The ECB is likely to leave its deposit rate unchanged at 2.50% at its October policy meeting on Thursday but raise it by 25 basis points (bps) in December as inflation runs nearly double its 2% target, according to a Reuters poll.
USD firms as yield curve flattens and Brent retreats from recent highs
Analysts at Commerzbank highlight a more cautious tone in rates and commodities, noting that "the US Treasury yield curve flattened slightly, with the short-end higher [while] the long-end edged lower." At the same time, they point out that "Brent crude oil prices pulled back from a near six-month high as diplomatic activity around the US-Iran conflict offered some relief to energy markets," while "the USD was slightly firmer."
Warsh flags investment surge and AI risks but avoids pre-committing on policy
Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 historical average, signaling a slightly less impactful tone relative to the established baseline despite broadly steady messaging. The admission of being “over-scarred” from the global financial crisis underscores a cautious bias even as Warsh highlights structural growth and an investment surge driven by “good policies,” while firmly refusing to pre-judge upcoming FOMC decisions. Warsh’s focus on AI as a near-term demand-side force and a tool to strengthen data confidence, alongside attention to negative tailside risks, points to a balanced stance between optimism on innovation and vigilance on financial stability.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, leaving the overall policy tone firmly in hawkish territory despite the slightly softer FXS Speechtracker score. The stable, elevated index level suggests markets see Warsh’s caution and emphasis on price stability and investment strength as consistent with a bias toward maintaining or tightening policy rather than shifting toward a more dovish Dollar stance.
Technical Analysis: EUR/USD maintains a bearish outlook in the near term
In the daily chart, EUR/USD maintains a bearish near-term bias as spot holds beneath the 100-day Simple Moving Average (SMA) and below the Bollinger Bands’ middle line. The pair is slipping along the lower half of the volatility envelope, with price only marginally above the lower band, while the Relative Strength Index (14) at 33.6 hovers just above oversold territory, hinting that downside pressure persists but is becoming stretched.
On the downside, the lower limit of Bollinger band at 1.1140 offers immediate support level. Any follow-through selling below the mentioned level would expose the 1.1100 psychological level, followed by the May 12, 2025 low of 1.0951.
On the topside, initial resistance level is located at the Bollinger middle band around 1.1215, followed by the upper boundary of Bollinger band near 1.1295. A decisive break above this level could pave the way to the 100-day SMA at 1.1445, acting as a more distant cap that reinforces the broader bearish structure.
(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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