200-week SMA: EUR/USD Price Forecast Highlights Last Line of Defence Against Deeper Losses

• EUR/USD faces continued pressure. A stronger US Dollar and concerns over France’s public finances weigh on the Euro.
• Trading below key moving averages, the pair maintains a bearish weekly chart outlook.
• The 200-week SMA comes into focus as key support while RSI nears oversold territory.

EUR/USD remains on the defensive on Friday. Following Thursday’s decline, the US Dollar (USD) recovers some ground alongside US Treasury yields. Concerns over France’s public finances put additional pressure on the Euro (EUR). Traders are also awaiting next week’s interest rate decisions from the Federal Reserve (Fed) and European Central Bank (ECB).

1.1190 is the pair’s approximate level at the time of writing, representing a daily fall of 0.22%. The US Dollar Index (DXY) stands near 101.82, having reached a three-week low of 101.45 on Thursday. The index measures the Greenback’s value against a basket of six major currencies.

December rate hikes expected after Fed and ECB pauses

An October pause is warranted for both central banks, according to Commerzbank economists, who say “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.” They anticipate a subsequent return to policy tightening, judging 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.” That outlook carries qualifications. Commerzbank adds that “the forecast for the ECB is contingent on the situation in the French government bond market not escalating.”

Weekly technical analysis: EUR/USD support and resistance

1.1105, the 200-week Simple Moving Average (SMA), sits marginally below EUR/USD. Sellers retain control, however, with the pair still beneath the 50-week SMA at 1.1585 and the 100-week SMA at 1.1379.

Further limiting the upside, EUR/USD remains below the 38.2% Fibonacci retracement at 1.1355 and the 23.6% retracement at 1.1634. The Relative Strength Index (RSI), at 34, sits just above oversold territory, while the Moving Average Convergence Divergence (MACD) stays negative. Both point to sustained, but not extreme, selling pressure. An Average Directional Index (ADX) reading around 20 indicates modest trend strength.

Initial downside support lies near 1.1130, the 50.0% Fibonacci retracement, followed closely by the 200-week SMA at 1.1105. A further decline would bring the 61.8% retracement at 1.0905 and the 78.6% level at 1.0585 into view. Beyond those levels, the structural floor sits around the 100.0% retracement at 1.0177.

The first upside obstacle is 1.1355, the 38.2% Fibonacci retracement, followed by the 100-week SMA at 1.1379. 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. Together, these levels form a concentrated resistance zone restricting the broader rebound.

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