EUR/USD Price Forecast: Declines below 1.1100, negative outlook remains intact under 100-day SMA
- EUR/USD weakens to around 1.1080 in Thursday’s early European session.
- The pair maintains a negative tone below the 100-day SMA, with bearish RSI momentum.
- The first upside barrier emerges in the 1.1090-1.1100 region; the initial support level is seen at 1.1000.
The EUR/USD pair declines to near 1.1080 during the early European trading hours on Thursday. A cautious stance from the European Central Bank (ECB) weigh on the Euro (EUR) against the US Dollar (USD). ECB policymaker Philip Lane said that energy prices may be falling, but the central bank’s interest rate decisions will depend on how strongly the recent surge in fuel costs spreads to wages and other prices.
On the other hand, bets on a 50-basis-point Federal Reserve (Fed) rate hike in December started to grow after a hotter-than-expected US inflation report and comments by Fed governor Christopher Waller. Waller said that he would support a quarter-point rate increase in December and might push for a half-point move if inflation data is worse than expected.
Traders await the US October Producer Price Index (PPI) data on Friday for more clues about the interest rate path. The headline PPI is expected to show a rise of 6.6% YoY in October, while the core PPI is projected to show an increase of 5.0% YoY during the same report period.
Euro outlook softens as ECB caution contrasts with Fed tightening
Strategists at Rabobank note that “the Fed is not the only G10 central bank widely expected to hike rates in December,” with the ECB “among those banks also likely to tighten policy.” However, they caution that “the ECB, however, could prove to be reluctant to hike rates beyond December,” pointing to signals from “the last ECB press conference” which “suggested that the GC were becoming increasingly concerns about the growth outlook.” In Rabobank’s house view, “market pricing for 2027 ECB rate rises remains too aggressive,” and they add that “another factor that could weigh on the EUR in the coming months are uncertainties about what a far-right president in France could mean for EU cooperation going forward.” Against this backdrop, Rabobank “forecast a move to EUR/USD1.10 on a 3-month view.”
Lane stresses consensus and delayed inflation response, modestly supportive for the Euro
Lane’s speech score of 6.2/10 matches the historic average on FXS Speechtracker, signaling a neutral overall impact but with a slight hawkish tilt. Emphasis on a “high premium on consensus” and a “high bar on directional forward guidance” suggests the ECB is reluctant to pre-commit on the policy path, yet wants flexibility via instruments for “multiple equilibriums” in the bond market, which can underpin Euro stability.
Lane’s focus on underlying inflation as a guide to one-year-ahead inflation, and the expectation of second-round effects, points to concern that price pressures may prove persistent even as energy prices reverse. The notion that headline inflation could fall while underlying inflation rises reinforces a cautious stance on easing, modestly supportive for the Euro as markets may price a slower and more conditional path to rate cuts.
Technical Analysis: Bearish outlook of EUR/USD remains intact below the 100-day SMA
In the daily chart, EUR/USD extends its slide beneath all visible moving average and volatility benchmarks to keep a clear bearish bias in place. The 100-day simple moving average (SMA) stays well above spot, reinforcing a medium-term capped structure, while price also trades under the Bollinger Bands (20, 2) lower band, hinting at persistent selling pressure around the recent lows. The Relative Strength Index (14) has recovered to 36 but remains below the neutral 50 line, suggesting only modest relief in momentum within an overall weak environment.
On the topside, initial resistance level emerges in the 1.1090-1.1100 zone, representing the lower limit of Bollinger band and the psychological level. Any follow-through buying above this level could pave the way to the middle band at 1.1180, en route to the upper boundary of Bollinger band at 1.1275 and the 100-day SMA at 1.1405.
On the downside, the 1.1000 round figure act as a key support level for the major pair. Sustained traing below the mentioned level could expose the May 12, 2025 low of 1.0951, followed by the May 27, 2025 low of 1.0733.
(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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