Above 1.1200: EUR/USD Price Forecast Highlights Gains Still Capped Below 100-day SMA

1.1235 is the level EUR/USD approaches as it strengthens in early European trading on Wednesday.
Below the 100-day SMA, the pair retains a bearish bias, while neutral RSI momentum leaves further consolidation possible.
1.1195 marks initial support, with 1.1255 providing the first resistance level.

1.1235 is within reach as EUR/USD advances in Wednesday’s early European session. The Euro (EUR) strengthens against the US Dollar (USD) after early US midterm election results showed Democrats had taken the US Senate and secured a majority in the US House of Representatives, wresting control from Republicans.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Carol Kong, currency strategist at Commonwealth Bank of Australia, said: "Given the Democrats are favoured right now, our expectation is that they will take control of both the House and the Senate," Carol added: “If that pans out, the US dollar could sell off further from here, because a Democratic sweep would limit government spending over Trump's term,”

Control of Congress’s upper chamber requires 51 seats, while a House of Representatives majority requires 218 seats. Historic victories in Texas, Iowa, Kansas, and South Carolina have brought the Democrats’ tally to 52 seats. The threshold for winning the upper chamber of Congress is 51 seats.

Live figures from the Decision Desk HQ put Democrats on 224 seats in the US House of Representatives, compared with 131 for Republicans.

1.1250 resistance in focus as Euro momentum strengthens

A quiet trading phase preceded the Euro’s latest advance, according to strategists at UOB Group. Looking back, they note that “two days ago, EUR briefly rose to 1.1237 and then retreated,” before the pair traded around 1.1190 yesterday. At that point, their assessment that “the brief advance did not lead to any increase in upward momentum,” led them to expect EUR “to trade in a range between 1.1160 and 1.1220.” Subsequent trading matched that assessment: the currency stayed within “a narrower range of 1.1174/1.1206” and finished “little changed at 1.1193 (+0.07%).”

Today’s early Asian trading has changed that picture, with UOB observing that EUR “rose sharply in the early Asian session today.” The bank now considers that “upward momentum is building, and there is room for EUR to test 1.1250,” although “it is too early to determine whether EUR can break clearly above this level.” A separate update repeats the assessment that “renewed upward momentum suggests it could test 1.1250,” with the qualification that “it must close above this level before a move to 1.1280 is likely.” UOB now places the “strong support” level at “1.1160.”

8.2 hawkish score: Nagel’s December hike signal supports Euro upside risks

An FXS Speechtracker score of 8.2, against a historic 7.0, indicates a more hawkish-than-usual message from ECB’s Nagel and a pronounced tightening bias. His view that “a rate hike in December is very likely to be necessary”, alongside inflationary pressures nearing the adverse scenario, signals upside risks to Euro interest rates and underpins the currency’s resilience in FX markets.

Readiness to counter second-round effects adds to that hawkish message, with Nagel insisting the ECB “can and must prevent an energy price spike from causing broad-based inflation”. His confidence that France will “get a grip on its budget issues”, together with his assertion that this is “not a task for monetary policy”, suggests fiscal worries are not yet regarded as an obstacle to ECB tightening. Euro rate expectations therefore remain tilted towards further increases rather than an early policy pivot.

Technical Analysis: EUR/USD faces a 100-day SMA ceiling

Trading below the 100-day simple moving average (SMA) leaves EUR/USD’s daily chart under bearish pressure. Despite the recent rebound, that ceiling continues to constrain the broader trend. The price holds above the Bollinger Bands’ middle band, the 20-day SMA, pointing to a limited recovery within an otherwise subdued structure. At 48.9, the Relative Strength Index (RSI) remains just below neutral: momentum appears to be stabilising, rather than making a decisive turn higher.

The Bollinger middle band at 1.1195 provides the first downside support, ahead of the lower Bollinger Band near 1.1132. Beyond that, the psychological 1.1100 mark is the next support area, followed by 1.0951, the low recorded on 12 May 2025.

The upper Bollinger Band near 1.1255 offers immediate resistance. A move beyond it would bring 1.1325, the 24 June low, into view. The more significant hurdle is the 100-day SMA, around 1.1420.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Euro: key questions answered

20 Eurozone countries: what is the Euro?

Used by the 20 European Union countries in the Eurozone, the Euro ranks second only to the US Dollar in global currency trading. It represented 31% of all foreign exchange transactions in 2022, with average daily turnover exceeding $2.2 trillion. The world’s most actively traded currency pair is EUR/USD, with an estimated 30% share of all transactions. Next are EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The ECB’s role in setting rates and influencing the Euro

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank, setting interest rates and directing monetary policy. Price stability is its central mandate, pursued through inflation control or measures to stimulate growth. Raising or cutting interest rates is its main policy instrument. Higher relative interest rates, or expectations of rate increases, generally support the Euro; the reverse also applies. Monetary policy is decided by the ECB Governing Council at eight meetings each year. The decision-makers comprise the heads of Eurozone national banks and six permanent members, among them ECB President Christine Lagarde.

2% inflation target: how price data affect the Euro

Measured using the Harmonised Index of Consumer Prices (HICP), Eurozone inflation is a key economic indicator for the Euro. Inflation rising faster than expected, particularly above the ECB’s 2% target, obliges the central bank to increase interest rates to regain control of prices. When the region’s rates are relatively high compared with those of its counterparts, the Euro usually benefits. The higher returns make the region a more attractive destination for global investors’ funds.

75% of the Eurozone economy: why economic releases matter for the Euro

By revealing the economy’s health, data releases can move the Euro. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys are among the indicators that can shape the single currency’s direction. Economic strength supports the Euro by drawing in foreign investment. It may also prompt the ECB to raise interest rates, directly strengthening the currency. Weak economic figures, by contrast, are likely to weigh on the Euro. Germany, France, Italy and Spain together account for 75% of the Eurozone’s economy. Releases from these four largest euro area economies therefore carry particular weight.

Trade Balance: the link between trade flows and the Euro

The Trade Balance is another important release for the Euro, showing the gap between a country’s export earnings and its spending on imports during a specified period. Strong overseas demand for a country’s exports creates additional demand for its currency as foreign buyers purchase those goods, lifting the currency’s value. A positive net Trade Balance consequently supports a currency, while a negative balance has the opposite effect.