EUR/USD Price Forecast: Outlook stays negative below 100-day SMA as pair falls under 1.1100

• Selling pressure takes EUR/USD towards 1.1080 as European trading gets under way on Thursday.
• Bearish RSI momentum reinforces the pair’s weak bias as it trades below the 100-day SMA.
• Resistance first comes into focus at 1.1090-1.1100, while 1.1000 marks the nearest support.

Pressure on the Euro (EUR) against the US Dollar (USD) sends EUR/USD towards 1.1080 in early European trade on Thursday, as the European Central Bank’s (ECB) cautious approach weighs on sentiment. According to ECB policymaker Philip Lane, energy prices may be declining, but interest rate decisions will hinge on the extent to which the recent jump in fuel costs feeds through to wages and other prices.

Meanwhile, expectations of a 50-basis-point Federal Reserve (Fed) rate increase in December began to strengthen following an above-forecast US inflation reading and remarks from Fed governor Christopher Waller. While Waller said he would back a quarter-point increase in December, he added that he might press for a half-point rise if inflation figures were worse than anticipated.

For further indications of the interest rate trajectory, traders are looking to Friday’s release of the US Producer Price Index (PPI) for October. Forecasts put annual headline PPI growth at 6.6% YoY in October, with core PPI expected to rise 5.0% YoY over the same reporting period.

Can the Euro withstand ECB caution as the Fed tightens?

Although 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 period thereafter: “the ECB, however, could prove to be reluctant to hike rates beyond December,” they say. They cite “the last ECB press conference” as having “suggested that the GC were becoming increasingly concerns about the growth outlook.” Rabobank’s house assessment is that “market pricing for 2027 ECB rate rises remains too aggressive,” while the strategists also flag 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.” Given these considerations, Rabobank strategists “forecast a move to EUR/USD1.10 on a 3-month view.”

Could Lane’s consensus focus and delayed inflation response lend modest support to the Euro?

A neutral overall signal with a mildly hawkish bias emerges from Lane’s 6.2/10 speech score on FXS Speechtracker, which is in line with its historical average. His emphasis on a “high premium on consensus” alongside a “high bar on directional forward guidance” indicates an unwillingness at the ECB to commit to a policy trajectory in advance. At the same time, the central bank seeks flexibility through instruments addressing “multiple equilibriums” in the bond market, potentially helping to stabilise the Euro.

Concern about lasting price pressures is evident in Lane’s use of underlying inflation to assess inflation one year ahead, together with his expectation of second-round effects, even as energy prices retreat. The possibility of headline inflation declining while underlying inflation climbs argues for caution over policy easing. This offers modest support to the Euro, as markets may factor in a slower pace of rate cuts that is more dependent on conditions.

Technical Outlook: Can EUR/USD shake off its bearish bias below the 100-day SMA?

A firmly bearish picture persists on the daily chart, where EUR/USD continues to retreat below every visible moving-average and volatility benchmark. With the 100-day simple moving average (SMA) still far above the spot price, the medium-term structure remains constrained on the upside. Trading below the lower Bollinger Bands (20, 2) boundary also points to sustained selling near the recent lows. Although the Relative Strength Index (14) has rebounded to 36, its position beneath the neutral 50 mark indicates only a limited improvement in momentum against a broadly weak backdrop.

The lower Bollinger band and the psychological level place the first resistance area at 1.1090-1.1100. Should buying extend beyond this zone, the middle band at 1.1180 could come into view, followed by the upper Bollinger band boundary at 1.1275 and the 100-day SMA at 1.1405. 

For the major currency pair, key downside support lies at the round number of 1.1000. A sustained spell of trading beneath that threshold could bring the 12 May 2025 low of 1.0951 into play, ahead of the 27 May 2025 low of 1.0733. 

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