EUR/USD Price Forecast: Gains traction above 1.1500, while remaining constrained below 100-day SMA
- EUR/USD gains ground to around 1.1535 in Monday’s early Asian session.
- The bearish tone of the major pair prevails under the 100-day SMA.
- The initial support level is seen at 1.1530; the immediate resistance level to watch is 1.1570.
The EUR/USD pair trades in positive territory near 1.1535 during the early European trading hours on Monday, bolstered by improved risk sentiment. The Euro (EUR) edges higher against the US Dollar (USD) after reports that US President Donald Trump had called off an attack on Iran and talks between the two sides would happen on Monday. Traders will closely monitor the developments surrounding US-Iran negotiations.
Traders brace for the German Retail Sales data for June, which is due later on Monday. If the reports come in weaker than expected, this could drag the shared currency lower. On the US docket, the US ISM Manufacturing Purchasing Managers Index (PMI) data will be published.
Technical Analysis:
In the daily chart, EUR/USD trades at 1.1533. The pair remains capped in the near term as spot holds below the 100-day simple moving average (SMA) at 1.1569, keeping the broader tone heavy despite the latest bounce. The Relative Strength Index (14) at 62.5 shows firm positive momentum, but with price still under the key trend average, this strength merely hints at a corrective rebound within a broader bearish backdrop.
On the downside, immediate support is aligned with the upper Bollinger Band at 1.1529, with the 20-day SMA middle band at 1.1430 and the lower band near 1.1331 marking deeper cushions if selling resumes. On the topside, a daily close above the 100-day SMA at 1.1569 would be needed to ease bearish pressure and open the way for a more sustained recovery toward higher levels.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro briefly lifted by French CPI as ECB commentary stays muted
Analysts at Scotiabank note that the Euro received “a modest lift” earlier in the session after French CPI data “came in well above expectations,” but stress that the support quickly faded as “the impact was short-lived as broader themes took hold.” They add that “comments from the ECB have been limited and the speaking calendar is empty over the next week or so,” leaving the currency largely to trade on prevailing macro drivers rather than fresh policy signals.
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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