EUR/USD Price Forecast: Advances above 1.1200 as 100-day SMA caps upside

Around 1.1235, EUR/USD is gaining ground in early European trading on Wednesday.
Below the 100-day SMA, the pair retains a bearish bias, although neutral RSI momentum leaves scope for further consolidation.
Support initially lies at 1.1195, with 1.1255 marking the nearest resistance on the upside.

Early US midterm election results showed Democrats taking control of the US Senate and securing a majority in the US House of Representatives, displacing Republicans. Against that backdrop, the US Dollar (USD) loses ground to the Euro (EUR), with EUR/USD advancing towards 1.1235 in Wednesday’s early European session.

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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," adding: “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 majority in the House of Representatives requires 218 seats. Democrats have now secured 52 seats following historic victories in Texas, Iowa, Kansas, and South Carolina. The threshold for winning the upper chamber of Congress is 51 seats.

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

Euro Gains Momentum Towards 1.1250 Resistance

A subdued spell of trading 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,” while yesterday, with the pair near 1.1190, they observed that “the brief advance did not lead to any increase in upward momentum,” leading them to expect EUR “to trade in a range between 1.1160 and 1.1220.” Subsequent trading was consistent with that assessment: the currency stayed within “a narrower range of 1.1174/1.1206” before finishing “little changed at 1.1193 (+0.07%).”

The tone has since changed markedly, UOB says, after EUR “rose sharply in the early Asian session today.” Its assessment is that “upward momentum is building, and there is room for EUR to test 1.1250,” although the bank cautions that “it is too early to determine whether EUR can break clearly above this level.” A separate update repeats that the “renewed upward momentum suggests it could test 1.1250,” while emphasising that “it must close above this level before a move to 1.1280 is likely.” UOB now places the downside “strong support” level at “1.1160.”

Nagel’s December Rate Hike Signal Underpins Euro Upside Risks

An FXS Speechtracker reading of 8.2, against a historical 7.0, indicates a more hawkish signal than usual from the ECB’s Nagel and a pronounced bias towards tightening. His assessment that “a rate hike in December is very likely to be necessary”, alongside inflationary pressures nearing the adverse scenario, highlights upside risks to Euro interest rates and lends support to the currency’s resilience in FX markets.

A willingness to counter second-round effects is reinforced by Nagel’s assertion that the ECB “can and must prevent an energy price spike from causing broad-based inflation”, strengthening the hawkish message. His confidence that France will “get a grip on its budget issues”, together with his view that this is “not a task for monetary policy”, indicates that fiscal worries are not yet regarded as a barrier to ECB tightening. Expectations for Euro interest rates therefore remain tilted towards additional increases rather than an early policy shift.

Technical Analysis: EUR/USD Faces Resistance Below the 100-Day SMA

Trading below the 100-day simple moving average (SMA), EUR/USD continues to face bearish pressure on the daily chart, with the broader trend constrained despite the recent recovery. The price nevertheless stands above the Bollinger Bands’ middle band, the 20-day SMA, signalling a modest rebound within an otherwise weak structure. At 48.9, the Relative Strength Index (RSI) remains just below neutral, pointing to stabilising momentum rather than a decisive upward turn.

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 to watch, followed by 1.0951, the low recorded on 12 May 2025.

The upper Bollinger Band near 1.1255 represents the nearest upside resistance, before the 24 June low at 1.1325. A more substantial hurdle lies around 1.1420 at the 100-day SMA.

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

Euro Questions Answered

The Euro Serves as the Eurozone’s Currency

Used by the 20 European Union countries that make up the Eurozone, the Euro ranks second only to the US Dollar among the world’s most actively traded currencies. Its share of all foreign exchange transactions reached 31% in 2022, with average daily turnover exceeding $2.2 trillion. An estimated 30% of all transactions involve EUR/USD, making it the world’s most actively traded currency pair. EUR/JPY follows at 4%, ahead of EUR/GBP at 3% and EUR/AUD at 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 principal mandate, whether through containing inflation or encouraging growth. Interest rate increases and reductions are its main policy tools. The Euro generally benefits from relatively high rates, or expectations of higher rates, while the reverse also holds. Monetary policy is determined by the ECB Governing Council, which meets eight times a year. The heads of the Eurozone’s national banks and six permanent members take those decisions, with ECB President Christine Lagarde among the latter.

Inflation Figures Shape the Euro’s Value

Measured using the Harmonised Index of Consumer Prices (HICP), Eurozone inflation is a key economic gauge for the Euro. A stronger-than-expected rise in inflation, particularly above the ECB’s 2% target, obliges the central bank to increase interest rates to regain control of prices. When the region’s interest rates are relatively high compared with those elsewhere, the Euro usually benefits: global investors find the region a more attractive destination for their money.

Economic Releases Help Steer the Euro

By offering a measure of economic 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 more foreign investment and potentially prompting the ECB to raise interest rates, which would directly strengthen the currency. Weak economic figures, by contrast, are likely to weigh on the Euro. Particular importance attaches to releases from Germany, France, Italy and Spain, the euro area’s four largest economies, which together represent 75% of the Eurozone economy.

The Trade Balance Influences Euro Demand

The Trade Balance is another important release for the Euro, capturing the difference between a country’s export earnings and its expenditure on imports over a specified period. Strong overseas demand for a country’s exports increases demand for its currency as foreign buyers seek to purchase those goods, raising its value. A positive net Trade Balance therefore strengthens a currency, while a negative balance has the opposite effect.

EUR/USD Price Forecast: Advances above 1.1200 as 100-day SMA caps upside

Euro Gains Momentum Towards 1.1250 Resistance

Nagel’s December Rate Hike Signal Underpins Euro Upside Risks

Technical Analysis: EUR/USD Faces Resistance Below the 100-Day SMA

Euro Questions Answered