Near 1.1200: EUR/USD Price Forecast as Gains Hold Below Key Technical Resistance

1.1190 is in focus as EUR/USD advances in early European trading on Friday.
Thursday’s ECB vote left interest rates unchanged.
Below the 100-day SMA, the pair’s outlook remains negative as RSI momentum stays bearish.
1.1200 marks the nearest resistance, while initial support stands at 1.1135.

EUR/USD is higher at around 1.1190. The pair gains in Friday’s early European session as a hawkish pause by the European Central Bank (ECB) lends some support to the Euro (EUR) against the US Dollar (USD). Preliminary Q3 Gross Domestic Product (GDP) figures from Germany and the Eurozone are due later on Friday, with traders preparing for the releases.

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

At 2.50%, the ECB’s deposit rate was left unchanged, in line with broad expectations. The decision followed September’s increase of 25 basis points (bps). In its statement, the Governing Council said higher energy prices created 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 rise, LSEG data showed.

December rate hike in focus as Euro steadies amid ECB energy shock

Additional tightening remains the bias in market pricing, according to Scotiabank strategists, who note that “markets expect a further 25bps hike in December, where many forecasters (including Scotia) think policymakers will halt.” Although they warn 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.”

Energy conditions complicate the inflation outlook, the bank says, noting 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 remains “neutral/bearish – The EUR remains technically soft but key support defined by the mid-October low at 1.1113 continues to hold.”

6.2/10 Speechtracker score: Lagarde highlights inflation risks, Euro stance stays measured

At 6.2/10, the FXS Speechtracker score sits just above its historical baseline of 6.1/10. This points to a largely unchanged tone, with slightly greater concern over inflation. Lagarde said the Euro area economy is growing in Q3, with AI investment, government spending and a recovery in exports expected to support near-term activity. She also highlighted the drag on confidence from renewed energy price rises, tighter financial conditions and fiscal uncertainty, leaving growth risks tilted to the downside.

The inflation message has become more hawkish. Energy prices have exceeded the baseline, pressures are emerging early in the pricing chain, wage growth is around 2.5%-2.8%, and headline inflation is likely to remain well above target in the coming quarters. The statement that inflation risks are tilted to the upside reinforces that shift. Even so, the unanimous rate hold and emphasis on a “measured approach” indicate that the ECB is not committing in advance to further tightening. Its focus on incoming data and underlying inflation during the next information-rich period moderates the hawkish tilt, supporting the Euro while limiting its upside until fresh data arrive.

Technical Analysis: 100-day SMA keeps EUR/USD outlook bearish

Below both the 100-day simple moving average (SMA) and the Bollinger Bands midline, EUR/USD continues to show a bearish daily chart. The pair is approaching support at the lower Bollinger band. Meanwhile, the 14-period Relative Strength Index remains subdued at around 41, indicating weak recovery momentum despite the recent stabilisation.

Near 1.1200, the Bollinger Bands midline provides immediate resistance. Above it, the upper Bollinger band at 1.1265 comes into view, followed by the 24 June low of 1.1325. The 100-day SMA at 1.1432 is the next barrier.

Initial support lies at 1.1135, the lower Bollinger band. A decisive break beneath it would likely expose the psychological level of 1.1100, ahead of the 12 May 2025 low at 1.0951.

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

Euro essentials: frequently asked questions

Euro: currency and trading profile

Used by the 20 European Union countries within the Eurozone, the Euro ranks behind only the US Dollar in global currency trading. Its share of all foreign exchange transactions was 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 are EUR/JPY at 4%, EUR/GBP at 3% and EUR/AUD at 2%.

ECB policy and its influence on the Euro

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank, setting interest rates and directing monetary policy. Price stability is its core mandate, pursued by controlling inflation or stimulating growth. Raising or cutting interest rates is its main policy instrument. The Euro usually benefits from relatively high rates or expectations of higher rates; the reverse also applies. Monetary policy decisions are taken by the ECB Governing Council at eight meetings each year. The decision-makers comprise the heads of Eurozone national banks and six permanent members, among them ECB President Christine Lagarde.

Inflation figures and the Euro’s value

Measured by the Harmonised Index of Consumer Prices (HICP), Eurozone inflation is a key economic indicator for the Euro. Inflation exceeding expectations, particularly when above the ECB’s 2% target, obliges the central bank to raise interest rates to regain control of prices. When the region’s interest rates are relatively high compared with those elsewhere, the Euro usually benefits, as global investors find the region more attractive for placing their money.

Economic indicators and Euro movements

By revealing the economy’s health, data releases can move the Euro. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys all help shape the single currency’s direction. Economic strength supports the Euro by attracting more foreign investment. It may also prompt the ECB to raise interest rates, directly strengthening the currency. Weak economic figures, by contrast, are likely to weigh on the Euro. Germany, France, Italy and Spain together represent 75% of the Eurozone economy. Data from these four largest euro area economies therefore carry particular significance.

Trade Balance and Euro demand

The Trade Balance is another important release for 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 its value. A positive net Trade Balance consequently strengthens a currency, while a negative balance has the opposite effect.