EUR/USD Price Forecast: Edges higher above 1.1050 but remains below 100-day SMA

• At around 1.1060, EUR/USD edges higher in early European trading on Friday.
• Trading below the 100-day SMA keeps the short-term outlook bearish.
• Initial resistance stands at 1.1100, while 1.1000 provides the first support.

At roughly 1.1060, EUR/USD is slightly firmer as Friday’s European session gets under way. Further gains in the major currency pair could nevertheless be constrained by the European Central Bank’s (ECB) cautious approach.

Although energy prices may be declining, ECB policymaker Philip Lane said the central bank’s interest rate decisions would hinge on the extent to which the recent jump in fuel costs feeds through to wages and other prices.

Most economists surveyed by Reuters anticipate that next month will bring the ECB’s final deposit rate increase of this cycle. However, with inflation reaching twice the 2% target, more than a third foresee another rise in early 2027.

In the US, persistently high inflation prompted warnings from Federal Reserve (Fed) officials earlier this week. Some indicated that they would be open to a 50-basis-point increase if price pressures do not subside.

The probability traders assign to a large rate increase at the Fed’s December policy meeting has risen to nearly 14.5% from 0% last week, according to the CME FedWatch tool.

Euro remains under pressure as uneven Eurozone growth curbs support from ECB tightening

Despite recent data, NBC analysts see limited scope for the Euro, which they say “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,” implies that more ECB tightening might not deliver appreciable gains for the currency. Citing “U.S. monetary policy continuing to favour the Dollar,” NBC maintains its “EUR/USD forecast of 0.65 at year-end, followed by a gradual recovery above 0.70 in 2025,”. Its outlook therefore points to continued near-term support for the Dollar before a modest Euro recovery.

Dollar draws support as Williams stresses US resilience and lingering inflation

A score of 7/10 on the FXS Speechtracker, compared with a historical average of 6.1/10, placed Williams’ moderately hawkish remarks above the Fed official’s established baseline. His descriptions of the US economy as “resilient” and “robust”, and inflation as “stubbornly persistent” and “too elevated”, support the case for additional tightening over time to return inflation to 2%. He also distinguished between targeting the rate of inflation and reversing the overall rise in prices. By warning that outright reductions in price levels could produce poor economic conditions, Williams signalled a preference for maintaining restrictive policy without pursuing aggressive deflation, a setting that generally supports the Dollar.

After a decline of 0.08 points, the FXS Fed Sentiment Index stood at 147.47, still firmly within hawkish territory. Remaining well above 100 despite that small retreat, the index indicates that Fed communications are strongly hawkish overall, in line with the above-baseline tone recorded by the FXS Speechtracker.

Technical Outlook: EUR/USD remains bearish below the 100-day SMA

Below both the 100-day simple moving average (SMA) and the middle Bollinger band on the daily chart, EUR/USD continues to show a bearish short-term bias. The pair is testing the lower Bollinger band, highlighting sustained selling pressure. Meanwhile, a Relative Strength Index (RSI) reading of 35.19 places it just above oversold territory, suggesting that downside momentum persists without being extreme.

The psychological 1.1100 mark offers the first resistance on any advance. Beyond that lie the middle Bollinger band around 1.1175 and the upper band at 1.1280, before the more significant obstacle of the 100-day SMA at 1.1400. 

For the major pair, the round-number 1.1000 level provides key support. A break below it could open the way to 1.0951, the low recorded on 12 May 2025, and then 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.)