EUR/USD Price Forecast: Gathers strength above 1.1550, bullish outlook remains intact
- EUR/USD edges higher to around 1.1585 in Wednesday’s early European session.
- The pair keeps a constructive outlook above the 100-day SMA, with bullish RSI momentum.
- The first upside barrier emerges at 1.1614; the initial support level to watch is 1.1570.
The EUR/USD pair trades in positive territory near 1.1585 during the early European trading hours on Wednesday. The Euro (EUR) edges higher against the US Dollar (USD) as the German ZEW survey beat forecasts. The European Central Bank (ECB) President Christine Lagarde’s is set to speak later on Wednesday.
Data on Tuesday showed that the German ZEW Survey - Economic Sentiment came in at 34.2 in August, versus 26.3 prior, better than the estimates of 30.00. The ZEW Survey - Current Situation improves to -61.1 in August, compared to -77.6 in July, stronger than the -68.8 expected.
Financial markets are now pricing in a continuation of the ECB hiking cycle. The ECB Watch Tool indicates a 90% to 94% probability of a 25 basis points (bps) hike to 2.50% at the next policy meeting scheduled for September 9.
Dollar index holds firm despite softer Fed expectations
Analysts at MUFG note that the recent shift in US Dollar sentiment, driven by last week’s data releases that have “helped ease Fed rate hike expectations,” has yet to trigger any meaningful liquidation of long Dollar positions. They point out that “DXY remains supported above the 200-day moving average level of 99.185,” underscoring that the softer policy outlook has not translated into “any great sell-off” in the Dollar index.
Technical Analysis: EUR/USD holds a positive tone in the near term
In the daily chart, EUR/USD holds a bullish near‑term bias as spot remains above the 100‑day moving average (MA) and the Bollinger middle band, suggesting a constructive underlying trend after recovering from the lower band support around 1.1364. Momentum is supportive, with the Relative Strength Index (14) at 63.8, hinting that buyers retain control but are approaching overbought territory rather than entering it decisively.
On the topside, initial resistance is defined by the August 17 high of 1.1614. The next hurdle is seen at the Bollinger upper band near 1.1650, where upside attempts could start to stall.
On the downside, immediate support is seen at the 100‑day MA at 1.1570, followed by the Bollinger middle band at 1.1505. A deeper pullbacks would look to the recent floor at the Bollinger lower band around 1.1365 to preserve the broader upturn.
(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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