EUR/USD Price Forecast: Final defence against deeper losses rests on 200-week SMA

• France’s fiscal concerns and a stronger US Dollar keep EUR/USD under pressure.
• Trading beneath key moving averages leaves EUR/USD with a bearish weekly outlook.
• The 200-week SMA comes into focus as key support while RSI nears oversold levels.

Concerns over France’s fiscal position weigh on the Euro (EUR) on Friday, leaving EUR/USD on the defensive as the US Dollar (USD) and US Treasury yields recover some ground after Thursday’s decline. Attention is also turning to next week’s interest rate decisions from the Federal Reserve (Fed) and the European Central Bank (ECB).

A daily loss of 0.22% leaves the pair trading at around 1.1190 at the time of writing. The US Dollar Index (DXY), which measures the dollar against a basket of six major currencies, meanwhile stands near 101.82, having reached a three-week low of 101.45 on Thursday.

Fed and ECB expected to hold rates before resuming increases in December

An October pause remains the view of economists at Commerzbank, who argue that “the Fed and the ECB thus have good reasons to pause in October, not least to gain more clarity on the economic and geopolitical conditions.” They nevertheless anticipate a resumption of monetary tightening thereafter, judging that “in December, however, both central banks are likely to respond to persistently high inflation and raise interest rates—as priced in by the futures markets—by 25 basis points.” The bank qualifies its outlook, noting that “the forecast for the ECB is contingent on the situation in the French government bond market not escalating.”

Technical analysis: EUR/USD remains under pressure on the weekly chart

Sellers retain the upper hand as EUR/USD sits below both the 50-week Simple Moving Average (SMA) at 1.1585 and the 100-week SMA at 1.1379, despite holding slightly above the 200-week SMA at 1.1105.

Overhead resistance is reinforced by the pair’s position beneath the 38.2% Fibonacci retracement at 1.1355 and the 23.6% retracement at 1.1634. With the Relative Strength Index (RSI) at 34, just outside oversold territory, and the Moving Average Convergence Divergence (MACD) still negative, selling pressure appears persistent rather than extreme. An Average Directional Index (ADX) reading of around 20 points to modest trend strength.

Initial downside support lies near 1.1130, the 50.0% Fibonacci retracement, followed closely by the 200-week SMA at 1.1105. A further decline would bring the 61.8% retracement at 1.0905 and the 78.6% level at 1.0585 into view, ahead of the structural floor near the 100.0% retracement at 1.0177.

For any advance, the first obstacle is the 38.2% Fibonacci retracement at 1.1355, followed by the 100-week SMA at 1.1379. A more substantial recovery would depend on a weekly close above both the 50-week SMA at 1.1585 and the 23.6% retracement at 1.1634. Together, these levels form a concentrated resistance zone that limits the broader rebound.

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