EUR/USD Price Forecast: Gains above 1.1200 face a ceiling below the 100-day SMA

Buying momentum lifts EUR/USD towards 1.1235 as Wednesday’s European session gets under way.
Below the 100-day SMA, the pair retains a bearish bias, while neutral RSI momentum leaves room for further consolidation.
On the downside, 1.1195 marks the first support to monitor, with the initial resistance on the upside at 1.1255.

A softer US Dollar (USD) against the Euro (EUR) helps EUR/USD advance towards 1.1235 in early European trade on Wednesday. Early US midterm election results showed that the Democrats had taken the US Senate and secured a majority in the US House of Representatives, wresting control from the Republicans.

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

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. Historic victories in Texas, Iowa, Kansas, and South Carolina have taken the Democrats’ tally to 52 seats. The threshold for winning the upper chamber of Congress is 51 seats.

Live figures from the Decision Desk HQ put the Democrats at 224 seats in the US House of Representatives, against 131 for the Republicans.

Can the Euro’s strengthening momentum take EUR through 1.1250 resistance?

The latest Euro advance follows a spell of muted trading, 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’s trading around 1.1190 led them to observe that “the brief advance did not lead to any increase in upward momentum,” and to expect EUR “to trade in a range between 1.1160 and 1.1220.” Subsequent price action was consistent with that assessment: the currency stayed within “a narrower range of 1.1174/1.1206” and finished “little changed at 1.1193 (+0.07%).”

Today’s early Asian trading has changed that assessment, with UOB highlighting that EUR “rose sharply in the early Asian session today.” In the bank’s view, “upward momentum is building, and there is room for EUR to test 1.1250,” although “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 making clear that “it must close above this level before a move to 1.1280 is likely.” For downside protection, UOB now places the “strong support” level at “1.1160.”

Could Nagel’s likely December rate hike add to Euro upside risks?

An FXS Speechtracker score of 8.2, against a historical 7.0, signals a more hawkish-than-usual message from 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, indicates upside risks to Euro interest rates and lends support to the currency in the FX market.

Readiness to counter second-round effects also comes through in Nagel’s insistence 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”, coupled with the view that this is “not a task for monetary policy”, suggests that fiscal worries are not yet regarded as an obstacle to ECB tightening. Expectations for Euro interest rates consequently remain tilted towards additional increases rather than an early policy pivot.

Technical Analysis: Can EUR/USD overcome the 100-day SMA cap?

Despite its recent recovery, EUR/USD continues to face bearish pressure on the daily chart, with trading below the 100-day simple moving average (SMA) restraining the broader trend. A position above the Bollinger Bands’ middle band, the 20-day SMA, points to a modest rebound within an otherwise subdued technical structure. At 48.9, the Relative Strength Index (RSI) remains just shy of neutral, indicating 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 boundary around 1.1132. Further below, the psychological 1.1100 mark is the next support area, followed by 1.0951, the low recorded on 12 May 2025.

For an upside extension, the first hurdle is the upper Bollinger Band boundary near 1.1255, before 1.1325, the 24 June low. A more significant resistance level 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: Frequently asked questions

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

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 traded currencies. Its share of all foreign exchange transactions stood at 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. 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 central bank, setting interest rates and conducting monetary policy. Maintaining price stability is its principal mandate, whether through bringing inflation under control or encouraging growth. Interest rate increases and cuts are its main policy instrument. Higher rates, or expectations of an increase, generally support the Euro; the reverse also holds. Monetary policy is decided at eight meetings each year by the ECB Governing Council. The decision-makers comprise the heads of the Eurozone’s national central banks and six permanent members, among them ECB President Christine Lagarde.

Why do inflation figures matter for the Euro?

For the Euro, a key economic measure is Eurozone inflation as tracked by the Harmonised Index of Consumer Prices (HICP). An inflation reading above expectations, particularly one exceeding the ECB’s 2% target, obliges the central bank to increase interest rates to restore control over prices. When interest rates are relatively higher than those of its counterparts, the Euro usually benefits because the region becomes a more appealing destination for global investors’ funds.

Why does economic data move the Euro?

By revealing the state of the economy, data releases can move the Euro. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys are among the indicators that can steer the single currency. Economic strength supports the Euro by attracting additional foreign investment and potentially encouraging the ECB to raise interest rates, which would directly strengthen the currency. Weak economic readings, by contrast, are likely to weigh on the Euro. Germany, France, Italy and Spain, the euro area’s four largest economies, together represent 75% of the Eurozone economy, making their data releases particularly important.

Why is the Trade Balance important for the Euro?

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