EUR/USD Price Forecast: Can the 200-week SMA hold as the last line of defence against deeper losses?

• Selling pressure persists in EUR/USD, with the Euro weighed down by US Dollar strength and concerns over France’s finances.
• Trading below key moving averages keeps the pair’s weekly technical outlook bearish.
• The 200-week SMA is coming into focus as crucial support as RSI nears oversold levels.

Pressure on EUR/USD persists on Friday, with France’s fiscal concerns weighing on the Euro (EUR) as the US Dollar (USD) and US Treasury yields recover some ground after Thursday’s decline. Attention now turns to next week’s interest rate decisions from the Federal Reserve (Fed) and the European Central Bank (ECB).

A daily decline of 0.22% leaves the pair trading near 1.1190 at the time of writing. Having reached a three-week low of 101.45 on Thursday, the US Dollar Index (DXY) is now around 101.82. The index measures the Greenback’s value against a basket of six major currencies.

Will the Fed and ECB pause before raising rates in December?

An October pause is warranted, according to economists at Commerzbank, who say that “the Fed and the ECB thus have good reasons to pause in October, not least to gain more clarity on the economic and geopolitical conditions.” Their outlook nevertheless points to renewed policy tightening: the bank assesses that “in December, however, both central banks are likely to respond to persistently high inflation and raise interest rates—as priced in by the futures markets—by 25 basis points.” This outlook comes with qualifications, Commerzbank cautions, noting that “the forecast for the ECB is contingent on the situation in the French government bond market not escalating.”

Technical analysis: Can weekly support hold?

Sellers retain control of EUR/USD as it trades below the 50-week Simple Moving Average (SMA) at 1.1585 and the 100-week SMA at 1.1379. The pair remains only slightly above the 200-week SMA at 1.1105.

Overhead resistance is reinforced by the pair’s position below the 38.2% Fibonacci retracement at 1.1355 and the 23.6% retracement at 1.1634. At 34, the Relative Strength Index (RSI) sits just above oversold territory, while the Moving Average Convergence Divergence (MACD) stays negative. Together, these indicators point to sustained, but not extreme, selling pressure. An Average Directional Index (ADX) reading around 20 suggests modest trend strength.

The first downside support lies near the 50.0% Fibonacci retracement at 1.1130, with the 200-week SMA at 1.1105 close behind. A further decline would bring the 61.8% retracement at 1.0905 and the 78.6% level at 1.0585 into view, followed by the structural floor near the 100.0% retracement at 1.0177.

For a more substantial recovery, EUR/USD would need a weekly close above both the 50-week SMA at 1.1585 and the 23.6% retracement at 1.1634. These levels form a concentrated resistance zone that limits the broader rebound. Before that, the pair faces an initial barrier at the 38.2% Fibonacci retracement at 1.1355, followed by the 100-week SMA at 1.1379.

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