EUR/USD Price Forecast: Bearish bias holds below key moving averages as pair eases below 1.1150

• Selling pressure takes EUR/USD towards 1.1120 in early European trading on Wednesday.
• Below the 100-day SMA, the pair retains its bearish outlook, though oversold conditions leave room for short-lived recoveries.
• On the downside, 1.1100 is the first target, while 1.1205 marks the nearest resistance.

A weaker tone prevails in EUR/USD, with the pair hovering near 1.1120 in Wednesday’s early European session. Caution could build across markets later in the day as the Federal Reserve (Fed) prepares to announce its interest rate decision on Wednesday. Attention will then shift to Thursday’s European Central Bank (ECB) policy meeting.

An unchanged benchmark rate range of 3.75%-4.00% is the market expectation for the Fed’s decision on Wednesday. According to the CME FedWatch tool, Fed funds futures imply a 92.8% probability that the Federal Open Market Committee (FOMC) will leave its policy interest rate unchanged. For December, the probability of a US rate increase is 84.4%.

Chris Weston, head of research at Pepperstone Group in Melbourne, said: "The Fed doesn't need to hike today to move markets," adding: "It simply needs to change the perceived probability of hiking in December."

For the Euro, Thursday’s ECB meeting is likely to bring no change in key interest rates, following September’s 25 bps increase. Near-term gains in the single currency could nevertheless be constrained by elevated energy costs, volatility in French government bonds and concerns over France’s fiscal position.

Why is Dollar strength weighing on EUR as Wall Street inches up?

A mixed yet broadly constructive US market backdrop is described by analysts at Commerzbank, who note that “the DJIA held steady, while the S&P500 and the Nasdaq Composite Index rose 0.6% and 1.2% respectively.” Turning to currencies, the analysts point to fresh support for the greenback, observing that “the Dollar Index rose 0.4% to 102.37,” while the firmer Dollar weighed on the single currency: “EUR-USD fell 50 pips to 1.1120.”

What do Warsh’s crisis caution and optimism on investment and AI mean for Dollar bulls?

A mildly less impactful tone emerges from Fed Chair Warsh’s comments, which register 5.6 on the FXS Speechtracker against a historical baseline of 6.1, although the messaging remains broadly consistent. Warsh’s description of being “over-scarred” by the Global Financial Crisis points to a structurally cautious approach to financial stability. At the same time, Warsh emphasises a structural surge in growth and investment while declining to commit in advance to a course of action at the October and December meetings. The focus on AI, both as an immediate source of demand and as a future aid to data-dependent policymaking, indicates openness to upside risks from productivity gains, alongside acknowledged uncertainty over employment.

The speech left the FXS Fed Sentiment Index at 127.51, with a 0.00-point change, maintaining a firmly hawkish reading. Thus, although the latest remarks did not add to the hawkish signal, the broader policy setting continues to favour the Dollar against the backdrop of elevated Fed hawkishness reflected in the FXS Fed Sentiment Index and the FXS Speechtracker.

Technical Analysis: Can oversold conditions ease EUR/USD’s bearish pressure?

Selling pressure remains evident on the EUR/USD daily chart. Spot trades below the 20-day Bollinger simple moving average and substantially beneath the 100-day moving average, with both indicators reinforcing the bearish bias. The price also sits below the lower Bollinger band, underscoring sustained selling. Meanwhile, a Relative Strength Index (14) reading around 30 points to oversold conditions that could temper the decline without yet reversing it.

Initial support for the major currency pair lies at the psychological 1.1100 mark. Sustained selling beneath that level would bring the 12 May 2025 low of 1.0951 into view. As long as EUR/USD stays firmly below this longer-term barrier, the broader outlook is likely to remain bearish.

For a recovery, the first resistance is the 20-day Bollinger midline at around 1.1205, followed by the upper Bollinger band near 1.1280. A convincing move above that latter level could open the way towards the 100-day moving average at 1.1440. 

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