EUR/USD Price Forecast: Can gains near 1.1250 last as bias remains bearish below the 100-day average?

• Gains take EUR/USD towards 1.1245 as Thursday’s European session gets under way.
• Below the 100-day SMA, the pair’s outlook stays bearish, while a neutral RSI leaves room for further consolidation.
• Resistance is closest at 1.1276, with immediate support at 1.1185.

EUR/USD edges higher towards 1.1245 in early European trade on Thursday, although concerns over France’s fiscal position could restrict further gains. Later on Thursday, European Central Bank (ECB) policymaker Fabio Panetta is due to deliver remarks.

France’s fiscal challenges came into focus on Wednesday, when its 10-year borrowing costs rose above 5% for the first time in 24 years. Unrest across the country over the weekend, driven partly by cuts to public services, has underlined the political difficulties involved in reining in budget deficits.

Spectra Markets' president Brent Donnelly described the impasse: "The euro cannot sell off—and it cannot rally," adding, "We are in a stalemate where the overhang of bad news just about perfectly offsets the market positioning,”

According to Reuters, the ECB is expected to keep its benchmark rate at 2.5% next week, although markets have almost fully priced in an increase before the end of the year.

In the US, the CME FedWatch tool indicates that traders assign only a small probability to a Federal Reserve (Fed) rate increase next week. The next hike is expected in December.

Why is EUR/USD holding its range despite the gas spike and bond jitters?

EUR/USD’s resilience to energy and bond-market pressures has drawn attention from analysts at Societe Generale. They describe it as “curious that cycle highs in nat gas prices and bond jitters have not triggered another leg down in a way that would have occurred prior to October.” The pair is no longer responding as it usually does to moves in energy prices and bond markets, with the analysts observing that “the correlations have broken down over the past two weeks or so,”. In the bank’s assessment, this “would suggest that most of the bad news is priced in or investors are not committed to putting on new directional trades, playing the ranges instead.”

Can investment growth and AI optimism support the Dollar as Warsh stays cautious on policy?

Immediate hawkish expectations for the Dollar were tempered by Fed Chair Warsh’s cautiously constructive, but less emphatic, remarks. An FXS Speechtracker score of 5.6, against a historical average of 6.1, indicated a somewhat softer tone than the established baseline. Warsh’s acknowledgement of being “over-scarred from the Global Financial Crisis” points to an aversion to risk. At the same time, Warsh emphasises a structural surge in growth and investment while declining to commit in advance to October and December decisions, preserving considerable policy flexibility. The focus on AI’s impact on demand, alongside the need to “crystalize” data covering output, employment and inflation, reflects a cautious approach guided by incoming data.

Despite the softer FXS Speechtracker reading, the broader policy message remained firmly hawkish: the FXS Fed Sentiment Index recorded a 0.00-point change, holding at an elevated 127.51. Taken together, that high index reading and Warsh’s unwillingness to prejudge meetings suggest markets should keep pricing in a restrictive policy bias, without an additional near-term hawkish impulse for the Dollar.

Technical outlook: Can EUR/USD shake off its near-term bearish bias?

A modest stabilisation has not removed EUR/USD’s near-term bearish bias on the daily chart. The pair remains below the 100-day Moving Average and slightly beneath the 20-day Bollinger simple moving average. At around 42, the Relative Strength Index (14) is still under the neutral 50 mark, indicating that downward momentum is moderating rather than turning around. Moving-average resistance overhead therefore continues to cap the pair.

Any advance would first encounter resistance at 1.1276, the high recorded on 6 October, before reaching the upper Bollinger band at 1.1372. Further up, the 100-day Moving Average near 1.1455 presents a more substantial hurdle. A recovery above it would be needed to reduce the broader bearish pressure. 

A decline would bring initial support near 1.1185, the low reached on 19 October, into focus, followed by the lower Bollinger band at 1.1120. Beyond these levels, the psychological 1.1000 mark remains the key support to monitor. 

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