1.1050: EUR/USD Price Forecast Highlights Modest Gains Above This Level, With Upside Capped Below 100-day SMA

• 1.1060 is the focus as EUR/USD edges higher in early European trading on Friday.
• Below the 100-day SMA, the pair retains a bearish short-term bias.
• 1.1100 marks the nearest resistance, while 1.1000 provides initial support.

1.1060 is where EUR/USD is trading with modest gains early in Friday’s European session. A cautious European Central Bank (ECB), however, could constrain further advances in the major currency pair.

Falling energy prices alone will not determine interest rate decisions, ECB policymaker Philip Lane said. The central bank will assess how far the recent jump in fuel costs feeds through to wages and other prices.

Most economists in a Reuters poll expect the ECB to make this cycle’s final deposit rate increase next month. More than a third, however, anticipate another rise in early 2027, with inflation reaching twice the 2% target.

In the US, persistently high inflation prompted warnings from Federal Reserve (Fed) officials earlier this week. Some indicated they would consider a 50-basis-point rate increase should price pressures not subside.

The probability of a large increase at the Fed’s December policy meeting is now priced at nearly 14.5%, according to the CME FedWatch tool. That compares with 0% last week.

Uneven Eurozone growth curbs ECB support for Euro

Elevated inflation and divergent growth prospects continue to constrain the Euro despite recent data, according to NBC analysts, who say it “remains caught between elevated inflation and an uneven growth outlook,”. Their warning that “further rate increases could therefore offer only limited currency support if accompanied by weaker growth expectations,” indicates that additional ECB tightening may deliver little meaningful strength for the currency. NBC maintains its “EUR/USD forecast of 0.65 at year-end, followed by a gradual recovery above 0.70 in 2025,” with “U.S. monetary policy continuing to favour the Dollar,”. The forecast reflects expectations of continued near-term Dollar support before a modest Euro recovery.

7/10 Williams score signals hawkish tone, supporting Dollar

A 7/10 FXS Speechtracker score puts Fed’s Williams above his historical average of 6.1/10, signalling a moderately hawkish message and a firmer policy stance than the established baseline. His description of the US economy as “resilient” and “robust”, coupled with inflation that is “stubbornly persistent” and “too elevated”, supports further tightening over time to bring inflation back to 2%. He also distinguished between targeting the inflation rate and reversing the overall rise in prices. His warning that outright price declines could lead to poor economic conditions points to a willingness to maintain restrictive policy without pursuing aggressive deflation, a setting that generally supports the Dollar.

At 147.47 after a 0.08-point decline, the FXS Fed Sentiment Index remains firmly in hawkish territory. The small retreat leaves the reading well above 100, indicating that Fed communications are still decisively hawkish overall. This aligns with the firmer-than-baseline message identified by the FXS Speechtracker.

Technical outlook: 100-day SMA caps EUR/USD as bearish bias persists

On the daily chart, trading below both the 100-day simple moving average (SMA) and the Bollinger bands’ middle line keeps EUR/USD’s short-term outlook bearish. The pair is testing the lower Bollinger band, signalling sustained downward pressure. At 35.19, the Relative Strength Index (RSI) sits just above oversold territory, suggesting bearish momentum remains in place without reaching an extreme.

1.1100, a psychological threshold, is the first resistance to watch. Beyond it lie the Bollinger middle line around 1.1175 and the upper band at 1.1280. A further advance would bring the more significant 100-day SMA at 1.1400 into view. 

1.1000 provides key round-number support for the pair. A break below it could open the way to 1.0951, the low of 12 May 2025, followed by 1.0733, the low of 27 May 2025. 

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