EUR/USD Forecast: Euro stays below 1.1400 as markets stabilize
- EUR/USD fluctuates in a narrow band below 1.1400 on Tuesday.
- The bullish bias remains intact in the short-term technical outlook.
- Investors could refrain from taking large positions ahead of the ECB's policy announcements.
EUR/USD moves up and down in a narrow channel at around 1.1350 after posting small gains on Monday. The pair's near-term technical outlook suggests that the bullish bias remains intact but investors could remain on the sidelines, waiting for the European Central Bank's (ECB) monetary policy announcements due Thursday.
Euro PRICE Last 7 days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -3.87% | -3.84% | -3.45% | -2.77% | -5.79% | -6.31% | -5.36% | |
| EUR | 3.87% | -0.02% | 0.39% | 1.13% | -2.00% | -2.50% | -1.56% | |
| GBP | 3.84% | 0.02% | 0.42% | 1.17% | -1.97% | -2.48% | -1.47% | |
| JPY | 3.45% | -0.39% | -0.42% | 0.71% | -2.41% | -2.98% | -1.92% | |
| CAD | 2.77% | -1.13% | -1.17% | -0.71% | -3.11% | -3.61% | -2.59% | |
| AUD | 5.79% | 2.00% | 1.97% | 2.41% | 3.11% | -0.51% | 0.51% | |
| NZD | 6.31% | 2.50% | 2.48% | 2.98% | 3.61% | 0.51% | 1.04% | |
| CHF | 5.36% | 1.56% | 1.47% | 1.92% | 2.59% | -0.51% | -1.04% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The improving risk mood helped EUR/USD hold its ground at the beginning of the week. On the other hand, the US Dollar (USD) found its footing following the previous week's steep decline and limited the pair's upside amid easing fears over a deepening global trade conflict.
In an interview with Fox Business Network on Monday, Kevin Hassett, Director of the United States (US) National Economic Council (NEC), said that they are making "enormous progress" on tariff talks with the European Union.
The US economic calendar will feature the Federal Reserve Bank of New York's Empire State Manufacturing Survey, alongside the Imports Price Index and Export Price Index data for March. A significant decline in the Empire State Manufacturing Index could revive concerns over an economic downturn in the US and caused the USD to come under renewed selling pressure with the immediate reaction.
Meanwhile, the data from the Eurozone showed that Industrial Production expanded by 1.1% on a monthly basis in February, surpassing the market expectation for an increase of 0.2%. On a negative note, ZEW Survey - Economic Sentiment slumped to -18.5 in April from 39.8 in March.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) holds above 60 on Tuesday, suggesting that the bullish bias remains intact in the near term. Additionally, EUR/USD holds comfortably above the 20-period Simple Moving Average (SMA).
On the upside, 1.1400 (psychological level, static level) aligns as first resistance before 1.1470 (static level) and 1.1500 (round level). Looking south, first support could be spotted at 1.1340 (static level) ahead of 1.1300 (static level, round level) and 1.1250 (static level).
Euro FAQs
The Euro is the currency for the 19 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.
(This story was corrected on April 15 at 09:41 GMT to say that ZEW Survey - Economic Sentiment slumped to -18.5 in April, not February.)
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
