EUR/USD Price Forecast: Falls to near 1.1600 due to persistent bearish bias
- EUR/USD may depreciate toward the seven-month low of 1.1468.
- The 14-day Relative Strength Index falls toward the low-30s, signaling rising selling pressure.
- The primary barrier lies at the nine-day EMA of 1.1705.
EUR/USD depreciates after registering modest gains in the previous session, trading around 1.1610 during the Asian hours on Thursday. The technical analysis of the daily chart suggests a persistent bearish bias as the EUR/USD pair remains within the descending channel pattern.
The momentum indicator 14-day Relative Strength Index (RSI) has retreated toward the low-30s from overbought readings seen in recent sessions, confirming increasing selling pressure rather than a mere consolidation above prior highs.
The near-term bias turns bearish after the pair slipped below the nine-day Exponential Moving Average (EMA) and now trades under the flatter 50-day EMA, signalling a loss of upside momentum from the earlier advance.
The EUR/USD pair may navigate the region around the seven-month low of 1.1468, followed by the lower boundary of the descending channel around 1.1450.
On the upside, the initial resistance lies at the nine-day EMA of 1.1705, followed by the 50-day EMA at 1.1758 and the upper descending channel boundary around 1.1800. Further advances above the channel would cause the emergence of the bullish bias and support the EUR/USD pair to explore the region around 1.2082, the highest level since June 2021.
(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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