EUR/USD Price Forecast: Bearish bias persists below 100-day SMA as pair eases to around 1.1150

At around 1.1165, EUR/USD is lower in early European trading on Tuesday.
Trading below the 100-day SMA leaves the pair’s outlook negative, while the RSI signals bearish momentum.
Immediate support stands at 1.1140, with 1.1215 marking the first resistance level.

France’s fiscal concerns have brought renewed financial stress to the Eurozone, extending the Euro’s (EUR) decline against the US Dollar (USD). EUR/USD is trading lower at about 1.1165 in Tuesday’s early European session. Attention now turns to interest rate decisions from the Federal Reserve (Fed) and the European Central Bank (ECB) later this week.

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

A nearly 89.5% probability of rates remaining within the current target range of 3.75% to 4.0% is priced in by traders, according to the CME FedWatch Tool. The Fed is expected to leave its benchmark interest rate unchanged on Wednesday.

Kit Juckes, chief global FX strategist at Societe Generale, said: "The fundamental issue with the euro hasn't changed and spreads have tightened," adding: "Euro is still vulnerable at this point because the growth outlook isn't good and energy prices are still elevated,"

With inflation running at almost twice the ECB’s 2% target, a Reuters poll suggests the central bank will raise its deposit rate by 25 basis points (bps) in December. Before then, it is expected to hold the rate at 2.50% at Thursday’s October policy meeting.

USD edges higher as the yield curve flattens and Brent eases from recent highs

A more guarded mood across rates and commodities is evident, according to Commerzbank analysts, who observe that "the US Treasury yield curve flattened slightly, with the short-end higher [while] the long-end edged lower." They also note that "Brent crude oil prices pulled back from a near six-month high as diplomatic activity around the US-Iran conflict offered some relief to energy markets," adding that "the USD was slightly firmer."

Warsh highlights investment growth and AI risks while withholding policy commitments

At 5.6/10, Fed Chair Warsh’s speech ranks slightly below the historical average of 6.1/10 on the FXS Speechtracker. Despite largely consistent messaging, the reading indicates a somewhat less impactful tone than the established baseline. Warsh’s acknowledgement of being “over-scarred” by the global financial crisis reveals a cautious leaning, even while he points to structural growth and a surge in investment supported by “good policies,” and firmly declines to prejudge forthcoming FOMC decisions. His treatment of AI as both a near-term source of demand and a means of improving confidence in data, together with his attention to downside tail risks, suggests a balance between optimism about innovation and vigilance over financial stability.

A move of 0.00 points left the FXS Fed Sentiment Index unchanged at 127.51. The overall policy tone therefore remained firmly hawkish, notwithstanding the slightly weaker FXS Speechtracker reading. The index’s steady, elevated level suggests markets interpret Warsh’s caution, focus on price stability and emphasis on investment strength as supporting a bias towards holding or tightening policy, rather than adopting a more dovish stance towards the Dollar.

Technical Analysis: EUR/USD remains under near-term bearish pressure

With spot below both the 100-day Simple Moving Average (SMA) and the middle Bollinger band, the daily chart continues to indicate a bearish near-term bias for EUR/USD. Prices are edging down through the lower half of the volatility envelope and sit only just above its lower band. Meanwhile, the Relative Strength Index (14), at 33.6, is just outside oversold territory, suggesting that selling pressure remains in place but is becoming stretched.

Immediate support comes from the lower Bollinger band at 1.1140. Sustained selling beneath that level would bring the psychological 1.1100 mark into view, ahead of the low of 1.0951 recorded on 12 May 2025.

The middle Bollinger band, at around 1.1215, provides the first resistance, with the upper Bollinger band near 1.1295 next in line. A convincing move above the latter could open the way towards the 100-day SMA at 1.1445. This more distant resistance reinforces the broader bearish structure.

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

Euro Questions Answered

The Euro’s Role in Currency Markets

Used by the 20 European Union countries within the Eurozone, the Euro ranks second only to the US Dollar among the world’s most traded currencies. Its share of all foreign exchange transactions in 2022 was 31%, with average daily turnover exceeding $2.2 trillion. An estimated 30% of all transactions involve EUR/USD, making it the world’s most traded currency pair. It is followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

ECB Policy Influences the Euro

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank, setting interest rates and overseeing monetary policy. Maintaining price stability is its central mandate, whether through containing inflation or encouraging growth. Changes in interest rates are its main policy instrument. Higher rates relative to those elsewhere, or expectations of an increase, generally support the Euro; the reverse also holds. Monetary policy is decided by the ECB Governing Council at eight meetings each year. The decision-makers comprise the heads of the Eurozone’s national banks and six permanent members, among them ECB President Christine Lagarde.

Inflation Figures Shape the Euro’s Value

Measured using the Harmonised Index of Consumer Prices (HICP), Eurozone inflation is a key economic indicator for the Euro. An increase above expectations, particularly one that exceeds the ECB’s 2% target, requires the central bank to raise interest rates to regain control of inflation. By making the region a more attractive destination for global investors’ funds, interest rates that are relatively high compared with those of its counterparts generally support the Euro.

Economic Releases Help Drive the Euro

The Euro can respond to data releases that reveal the economy’s underlying health. GDP, manufacturing and services PMIs, employment figures and consumer sentiment surveys are among the indicators capable of moving the single currency. Economic strength supports the Euro by drawing in more foreign investment and potentially prompting the ECB to raise interest rates, which would strengthen the currency directly. Weak economic readings, by contrast, are likely to weigh on the Euro. Particular weight is attached to figures from Germany, France, Italy and Spain. Together, these four largest euro area economies represent 75% of the Eurozone’s economy.

The Trade Balance Affects Demand for the Euro

The trade balance is another release with significant implications for the Euro. Over a specified period, it records the difference between a country’s export earnings and its expenditure on imports. Strong overseas demand for a country’s exports creates additional demand for its currency as foreign buyers seek to purchase those goods, increasing the currency’s value. A positive net trade balance consequently supports a currency, while a negative balance has the opposite effect.

EUR/USD Price Forecast: Bearish bias persists below 100-day SMA as pair eases to around 1.1150

USD edges higher as the yield curve flattens and Brent eases from recent highs

Warsh highlights investment growth and AI risks while withholding policy commitments

Technical Analysis: EUR/USD remains under near-term bearish pressure