EUR/USD Price Forecast: Can the pair clear key technical resistance as it holds gains near 1.1200?

EUR/USD gains towards 1.1190 as early European trading gets under way on Friday.
Interest rates were left unchanged following Thursday’s ECB vote.
Below the 100-day SMA, the pair retains a bearish bias, reinforced by negative RSI momentum.
Initial resistance stands at 1.1200, while the first support lies at 1.1135.

The Euro (EUR) finds some support against the US Dollar (USD) following the European Central Bank’s (ECB) hawkish pause, with EUR/USD trading higher around 1.1190 in Friday’s early European session. Attention now turns to the preliminary Q3 Gross Domestic Product (GDP) figures for Germany and the Eurozone, due later on Friday.

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

After a 25 basis points (bps) increase in September, the ECB kept its deposit rate unchanged at 2.50%, in line with widespread expectations. In its statement, the Governing Council noted that higher energy prices presented upside risks to the inflation outlook and downside risks to growth. Underlying inflation and wages, however, had remained broadly stable so far.

Following the announcement, money markets assigned roughly a 67% probability to a December rate increase, LSEG data showed.

Can the Euro stay steady as the ECB weighs an energy shock and a December hike?

Market pricing continues to favour further tightening, according to Scotiabank strategists, who note that “markets expect a further 25bps hike in December, where many forecasters (including Scotia) think policymakers will halt.” While warning that “we likely won’t get insight into that prospect today,” they expect President Lagarde to “frame the outlook in a way that keeps the door open to a December move amid elevated energy prices whilst maintaining optionality in the face of uncertainties.”

Highlighting the inflation difficulties arising from energy conditions, the bank observes that “benchmark European Natgas prices are roughly double the ECB’s September forecast and some 30% above the ‘adverse’ scenario amid tight supplies and low storage.” Scotiabank’s technical assessment is still “neutral/bearish – The EUR remains technically soft but key support defined by the mid-October low at 1.1113 continues to hold.”

Do Lagarde’s inflation warnings change the measured outlook for the Euro?

A broadly unchanged tone, with a modest increase in inflation concern, is reflected in the FXS Speechtracker score of 6.2/10, just above its historical baseline of 6.1/10. According to Lagarde, the Euro area economy is growing in Q3, with AI investment, government spending and a recovery in exports expected to support near-term growth. At the same time, she emphasised that fresh energy price rises, tighter financial conditions and fiscal uncertainty are undermining confidence, leaving risks to growth tilted to the downside.

A more hawkish inflation message emerges from the focus on energy prices exceeding the baseline, early pressures along the pricing chain, wage growth of around 2.5%-2.8% and headline inflation likely to remain well above target over the coming quarters. The statement that inflation risks are tilted upwards reinforces that shift. Nevertheless, the unanimous rate hold, emphasis on a “measured approach” and attention to incoming data and underlying inflation during the next data-heavy period indicate that the ECB is not committing in advance to more tightening. This moderates the hawkish bias, supporting the Euro while limiting its gains until fresh data arrive.

Technical Analysis: Can EUR/USD shake off its bearish bias below the 100-day SMA?

Below both the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line, EUR/USD continues to show a bearish bias on the daily chart. Although the pair has stabilised recently, recovery momentum appears weak: the 14-period Relative Strength Index remains subdued around 41, while the price moves nearer to support at the lower Bollinger band.

Near 1.1200, the Bollinger Bands’ middle line marks the immediate resistance area. Beyond that lie the upper Bollinger band at 1.1265 and the 24 June low of 1.1325, with the 100-day SMA at 1.1432 providing the next barrier to monitor.

Initial downside support sits at 1.1135, the lower Bollinger band. If the pair breaks decisively below it, the psychological 1.1100 mark would likely come into focus, ahead of the 12 May 2025 low of 1.0951.

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

Euro: frequently asked questions

Which countries use the Euro, and how widely is it traded?

Used by the 20 European Union countries within the Eurozone, the Euro ranks as the world’s second most traded currency after the US Dollar. 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 traded currency pair. Next come EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

What role does the ECB play in determining the Euro’s value?

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank, setting interest rates and conducting monetary policy. Maintaining price stability is the ECB’s main mandate, requiring it either to contain inflation or to stimulate growth. Interest rate increases and cuts are its principal policy tool. Higher relative interest rates, or expectations that rates will rise, 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.

Why do inflation figures matter for the Euro?

The Harmonized Index of Consumer Prices (HICP), which measures Eurozone inflation, is a key economic indicator for the Euro. An inflation reading above expectations, particularly one exceeding the ECB’s 2% target, requires the central bank to increase interest rates to regain control of price pressures. When the region’s interest rates are relatively higher than those of its counterparts, the Euro usually benefits, as global investors find it more attractive to place their money there.

Why does economic data move the Euro?

By indicating 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 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 push the Euro lower. Particular attention is paid to Germany, France, Italy and Spain, the euro area’s four largest economies, because together they represent 75% of the Eurozone economy.

Why is the Trade Balance important for the Euro?

The Trade Balance is another key release affecting the Euro. Over a specified period, it records the difference between a country’s export earnings and its spending on imports. Strong foreign demand for a country’s exports creates additional demand for its currency as overseas buyers seek to purchase those goods, lifting the currency’s value. A positive net Trade Balance therefore strengthens a currency, while a negative balance has the opposite effect.