EUR/USD Price Forecast: The constructive outlook prevails above 1.1150
- EUR/USD holds positive ground around 1.1165 in Friday’s Asian session.
- The pair keeps the positive stance above the key 100-period EMA, with the bullish RSI indicator.
- The first upside barrier emerges at 1.1172; the initial support level is located at 1.1130.
The EUR/USD pair trades in positive for the third consecutive day near 1.1165 during the Asian trading hours on Friday. The bearish US Dollar (USD) after the US Federal Reserve (Fed) began its easing cycle with an unexpected 50 basis point (bps) rate cut at its September meeting underpins the major pair.
The bullish outlook of EUR/USD remains intact as the major pair is well supported above the key 100-period Exponential Moving Averages (EMA) on the 4-hour chart. Furthermore, the upward momentum is reinforced by the Relative Strength Index (RSI), which is above the midline near 67.45, suggesting the further upside looks favorable.
A decisive break above the upper boundary of Bollinger Band of 1.1172 could see a rally to the 1.1190-1.1200 region. The mentioned level is the confluence of the psychological mark and the high of September 18. Further north, the next hurdle emerges at 1.1240, the high of July 19.
In the bearish event, the low of September 19 near 1.1130 acts as an initial support level for the major pair. Any follow-through selling below this level will see a drop to the 1.1100 psychological figure. The additional downside filter to watch is 1.1088, the 100-period EMA.
EUR/USD 4-hour chart
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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