EUR/USD Price Forecast: Gains hold near 1.1200 beneath key technical resistance

• Around 1.1190, EUR/USD trades higher in early European dealings on Friday.
• Thursday’s ECB vote left interest rates unchanged.
• Below the 100-day SMA, the pair’s outlook remains negative as the RSI signals bearish momentum.
• Resistance initially stands at 1.1200, while the first support lies at 1.1135.

With the European Central Bank (ECB) delivering a hawkish hold on interest rates, the Euro (EUR) finds some support against the US Dollar (USD), lifting EUR/USD towards 1.1190 in early European dealings on Friday. Attention now turns to the preliminary Q3 Gross Domestic Product (GDP) figures for Germany and the Eurozone, due later on Friday.

Following September’s increase of 25 basis points (bps), the ECB left its deposit rate unchanged at 2.50%, in line with widespread expectations. In its statement, the Governing Council described higher energy prices as an upside risk to the inflation outlook and a downside risk to growth. Underlying inflation and wages, however, had remained broadly stable so far.

After the announcement, money markets assigned roughly a 67% probability to a December rate increase, LSEG data showed.

Euro remains steady as energy shock fuels debate over December ECB hike

Further tightening remains favoured by market pricing, according to Scotiabank strategists, who observe 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 anticipate that President Lagarde will “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 argues, 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.” Its 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.”

Euro outlook stays measured as Lagarde highlights upside inflation risks

At 6.2/10, the FXS Speechtracker score sits just above its historical baseline of 6.1/10, indicating little overall change in tone but a modest increase in concern about inflation. According to Lagarde, 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 nevertheless emphasised that renewed rises in energy prices, tighter financial conditions and fiscal uncertainty are undermining confidence, leaving the balance of growth risks tilted downwards.

A more hawkish inflation message emerged from the focus on energy prices exceeding the baseline, early pressures along the pricing chain, wage growth of around 2.5%-2.8% and headline inflation likely to remain well above target over coming quarters. The explicit warning that inflation risks are tilted to the upside reinforced that message. Even so, the unanimous vote to keep rates unchanged and the emphasis on a “measured approach” point to no advance commitment to further tightening. Incoming data and underlying inflation will be important during the next information-rich period, tempering the hawkish tilt and leaving the Euro supported but with gains constrained until fresh figures arrive.

Technical Analysis: EUR/USD stays bearish below the 100-day SMA

Trading below both the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line leaves EUR/USD with a bearish daily-chart outlook. As the pair moves towards support at the lower Bollinger band, the 14-period Relative Strength Index remains subdued at around 41. This points to limited recovery momentum despite the recent stabilisation.

An initial upside obstacle lies near the Bollinger Bands’ middle line at 1.1200. Beyond that, resistance comes at the upper Bollinger band of 1.1265 and the 24 June low of 1.1325, before the 100-day SMA at 1.1432. 

Initial downside support sits at 1.1135, the lower Bollinger band. A decisive breach would likely expose the psychological 1.1100 level, with the 12 May 2025 low of 1.0951 next in line.  

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