EUR/USD Price Forecast: Rises above 1.1800 toward nine-day EMA barrier
- EUR/USD could find the primary resistance at the nine-day EMA of 1.1836.
- The 14-day Relative Strength Index rose to a neutral 53, signaling improving momentum.
- The initial support lies at the 50-day EMA of 1.1737.
EUR/USD rebounds after two days of losses, trading around 1.1810 during the Asian hours on Tuesday. The technical analysis of the daily chart shows that the pair remains slightly below the ascending channel pattern, suggesting a potential bearish reversal. However, a return to the channel would revive the bullish bias.
The EUR/USD pair holds above the rising 50-day Exponential Moving Average (EMA), while it sits just beneath the nine-day EMA, capping the immediate upside. The short-term average remains above the medium-term, preserving a bullish bias. Trend structure remains underpinned by the upward slope of the 50-day EMA, yet a flattening 9-day EMA curbs gains until reclaimed.
The 14-day Relative Strength Index (RSI) momentum indicator at 53 (neutral) has firmed from prior readings, indicating improving momentum.
The initial barrier lies at the nine-day EMA of 1.1836. A close back above the short-term average would strengthen the advance toward the ascending channel. A successful return to the channel would improve the bullish bias and support the EUR/USD pair to explore the region around 1.2082, the highest level since June 2021. Further gains would expose the upper boundary of the ascending channel around 1.2290.
On the downside, the EUR/USD pair may test the 50-day EMA at 1.1737. A loss of the 50-day average would shift risk lower toward the two-month low at 1.1578, set on January 19.
(The technical analysis of this story was written with the help of an AI tool.)
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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