EUR/USD Price Forecast: Bearish outlook persists below 100-day SMA as pair drops under 1.1100

Around 1.1080 marks the latest level for EUR/USD as the pair slips in early European trading on Thursday.
Below the 100-day SMA, the pair retains a bearish bias, reinforced by negative RSI momentum.
Resistance initially lies in the 1.1090-1.1100 area, while 1.1000 provides the first support level.

The 1.1080 area comes into focus as EUR/USD moves lower in Thursday’s early European session, with the European Central Bank’s (ECB) cautious approach weighing on the Euro (EUR) against the US Dollar (USD). According to ECB policymaker Philip Lane, although energy prices may be declining, interest rate decisions will hinge on the extent to which the recent jump in fuel costs feeds through to wages and other prices.

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

Meanwhile, a stronger-than-expected US inflation release and remarks from Federal Reserve (Fed) governor Christopher Waller have prompted growing bets on a 50-basis-point rate increase in December. Waller indicated support for a quarter-point rise that month, adding that he might favour a half-point increase should inflation figures prove worse than expected.

Friday’s release of the US October Producer Price Index (PPI) will be watched by traders for further indications of the interest rate outlook. Forecasts put the annual rise in headline PPI at 6.6% YoY in October, with core PPI expected to increase by 5.0% YoY over the same reporting period.

Euro outlook weakens as cautious ECB faces contrast with Fed tightening

While Rabobank strategists observe that “the Fed is not the only G10 central bank widely expected to hike rates in December,” they place the ECB “among those banks also likely to tighten policy.” Their caution centres on the possibility that “the ECB, however, could prove to be reluctant to hike rates beyond December,” citing indications from “the last ECB press conference” that “suggested that the GC were becoming increasingly concerns about the growth outlook.” Rabobank’s house view is that “market pricing for 2027 ECB rate rises remains too aggressive,” while a further concern is that “another factor that could weigh on the EUR in the coming months are uncertainties about what a far-right president in France could mean for EU cooperation going forward.” In that context, the bank’s strategists “forecast a move to EUR/USD1.10 on a 3-month view.”

Euro receives modest support from Lane’s emphasis on consensus and delayed inflation effects

At 6.2/10, Lane’s speech score is in line with the historical average on FXS Speechtracker, indicating a broadly neutral effect with a mildly hawkish bias. His emphasis on a “high premium on consensus” alongside a “high bar on directional forward guidance” points to reluctance at the ECB to commit to a policy course in advance. At the same time, its desire to retain flexibility through instruments addressing “multiple equilibriums” in the bond market can help support stability in the Euro.

Concern over potentially persistent price pressures is reflected in Lane’s use of underlying inflation to gauge inflation one year ahead, together with his expectation of second-round effects, even as energy prices retreat. With headline inflation potentially falling while underlying inflation increases, the case for caution over easing is reinforced. This offers modest support to the Euro, as markets may factor in a slower rate-cutting path that is more dependent on conditions.

Technical Assessment: EUR/USD retains bearish bias beneath the 100-day SMA

A distinctly bearish picture persists on the daily chart as EUR/USD continues to fall below every visible moving-average and volatility reference. Spot remains well beneath the 100-day simple moving average (SMA), underlining the constraints on medium-term upside. Trading below the lower Bollinger Bands (20, 2) boundary also suggests continued selling pressure near the recent lows. Although the Relative Strength Index (14) has rebounded to 36, it is still short of the neutral 50 threshold, pointing to only a limited improvement in momentum against an otherwise weak backdrop.

The lower Bollinger band and the psychological threshold place the first resistance area at 1.1090-1.1100. Further buying above this zone could open a path towards the middle band at 1.1180, ahead of the upper Bollinger band at 1.1275 and the 100-day SMA at 1.1405.

For the major pair, key downside support stands at the round number of 1.1000. A sustained spell of trading beneath that level could bring the 12 May 2025 low at 1.0951 into view, followed by the 27 May 2025 low at 1.0733.

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

Euro questions and answers

The Euro’s role in currency markets

Used by the 20 European Union countries within the Eurozone, the Euro ranks behind only the US Dollar among the world’s most actively traded currencies. Its share of global foreign exchange transactions stood at 31% in 2022, with average daily turnover exceeding $2.2 trillion. Among currency pairs, EUR/USD leads global trading with an estimated 30% of all transactions. Next come EUR/JPY at 4%, EUR/GBP at 3% and EUR/AUD at 2%.

ECB policy influences the Euro

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank, setting interest rates and overseeing monetary policy. Maintaining price stability is the ECB’s principal mandate, which entails either curbing inflation or encouraging growth. Changes to interest rates are its main policy instrument. The Euro usually benefits when rates are relatively high, or expected to rise, while the reverse generally holds when rates are lower. Monetary policy is determined at ECB Governing Council meetings eight times a year. The decision-makers comprise the heads of the Eurozone’s national central banks and six permanent members, among them ECB President Christine Lagarde.

Inflation figures shape the Euro’s value

For the Euro, a key economic measure is Eurozone inflation as tracked by the Harmonised Index of Consumer Prices (HICP). An unexpectedly strong increase in inflation, particularly above the ECB’s 2% target, requires the central bank to raise interest rates to restore control over prices. When interest rates are relatively high compared with those elsewhere, the Euro generally benefits: the region becomes a more appealing destination for international investors’ funds.

Economic releases help determine the Euro’s direction

By providing a measure of economic health, data releases can affect the Euro. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys are among the indicators capable of moving the single currency. Economic strength supports the Euro both by drawing in additional foreign investment and by potentially encouraging the ECB to raise interest rates, which would directly strengthen the currency. Weak figures, by contrast, are likely to leave the Euro lower. Particular weight is attached to releases from Germany, France, Italy and Spain, the euro area’s four largest economies, which together represent 75% of the Eurozone economy.

The Trade Balance affects demand for the Euro

The Trade Balance is another important release for the Euro, recording the gap between a country’s export earnings and its spending on imports during a specified period. Strong overseas demand for a country’s exports creates additional demand for its currency from foreign buyers purchasing those goods, thereby lifting its value. A positive net Trade Balance therefore supports a currency, whereas a negative balance has the opposite effect.

EUR/USD Price Forecast: Bearish outlook persists below 100-day SMA as pair drops under 1.1100

Euro outlook weakens as cautious ECB faces contrast with Fed tightening

Euro receives modest support from Lane’s emphasis on consensus and delayed inflation effects

Technical Assessment: EUR/USD retains bearish bias beneath the 100-day SMA