Below 1.1250: EUR/USD Slips, Price Forecast Stays Bearish Below 100-day SMA

1.1225 is the approximate level for a weaker EUR/USD in early European trading on Wednesday.
Military support will help French authorities maintain order during protests planned for the coming weekend.
Below the 100-day SMA, the pair retains a negative outlook as RSI momentum remains bearish.
1.1185 provides initial support, while 1.1252 is the immediate resistance to monitor.

1.1225 is where EUR/USD is trading on a weaker footing early in Wednesday’s European session. Turmoil in France and fiscal worries are pressuring the Euro (EUR) against the US Dollar (USD). Later in the day, traders will focus on speeches by European Central Bank (ECB) policymakers, including President Christine Lagarde, Philip Lane, Joachim Nagel and Piero Cipollone.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Troops will support French police in a major security operation ahead of further protests planned for Saturday, according to Reuters. The move follows the government’s admission of shortcomings in its handling of last weekend’s violence. French Prime Minister Sébastien Lecornu also announced fresh curfews “where the situation requires it.”

Handelsbanken FX strategist Tommy von Brömsen said, "The worries in France are not going away anytime soon," adding: "The bearish view on France will stay for a while longer, and there's much more euro weakness to be priced in,”

Whether further interest rate increases would be necessary, and when they might come, was left open by the Federal Reserve (Fed) Chair last week.

Speaking at the IMF annual meeting in Bangkok, Warsh said, "I don't prejudge meetings," and added: "I don't believe in saying now what I might do at the meetings that we have in the balance of this year,”

1.1160 to 1.1280: UOB Retains EUR/USD Consolidation View

A near-term sideways phase remains the view of UOB Group strategists. They refer to last Friday’s update, issued when EUR/USD stood at 1.1215, and repeat that the Euro “has likely entered a range-trading phase, and for the time being, it is likely to trade between 1.1160 and 1.1280.” By continuing to “hold the same view for now,” UOB favours consolidation over a directional forecast at this point.

5.6/10: Warsh Highlights Investment and AI Without Policy Commitment

A FXS Speechtracker reading of 5.6/10 captured Fed Chair Warsh’s cautiously constructive message. Slightly below the historical average of 6.1/10, the score was consistent with a balanced tone. His admission of being "over-scarred from the global financial crisis" highlights an enduring emphasis on risk management and financial stability. At the same time, Warsh points to structural growth and an investment surge supported by "good policies", while declining to prejudge forthcoming FOMC decisions. He presents AI as a near-term source of demand and a means of improving confidence in data. Together with plans for an AI field hearing and new Fed task forces, that emphasis signals a forward-looking approach that could ultimately alter Dollar expectations if productivity and inflation dynamics change.

At 127.51, the FXS Fed Sentiment Index remained elevated and unchanged, recording a 0.00-point move. Despite Warsh’s refusal to commit on future meetings, the speech therefore left perceptions of the policy stance firmly hawkish. An unchanged FXS Fed Sentiment Index alongside a slightly weaker FXS Speechtracker score indicates that markets perceive no immediate change in the Fed’s reaction function. Warsh’s caution, shaped by the financial crisis, and his attention to financial stability risks support expectations of a vigilant, data-dependent approach rather than a decisive dovish turn.

Technical Analysis: 1.1252 Resistance Keeps EUR/USD Under Bearish Pressure

Below both the 20-day Bollinger simple moving average and the 100-day simple moving average (SMA), EUR/USD retains a bearish near-term bias on the daily chart. Trading beneath the upper Bollinger band also supports the view that the pair remains within a broader downward structure. At 39.6, the Relative Strength Index (14) is in bearish territory without reaching oversold thresholds. This points to continuing selling pressure rather than exhaustion.

Initial support lies at 1.1185, the low recorded on 19 October. Below that, the lower Bollinger band at 1.1115 is the next level to watch. A decisive break beneath it would likely clear the way towards the psychological 1.1000 mark, followed by the 12 May 2025 low of 1.0951.

For a recovery, the first resistance is the 20-day Bollinger SMA near 1.1252, ahead of the upper Bollinger band around 1.1390. Sustained buying above that level could open the way towards the 100-day SMA at 1.1460.

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

Euro: Key Questions

The Euro at a Glance

Used by the 20 European Union countries in the Eurozone, the Euro ranks second only to the US Dollar in global currency trading. Its share of all foreign exchange transactions reached 31% in 2022, with daily turnover averaging more than $2.2 trillion. An estimated 30% of all transactions involve EUR/USD, making it the world’s most actively traded currency pair. EUR/JPY follows with 4%, ahead of EUR/GBP at 3% and EUR/AUD at 2%.

The ECB’s Role in Euro Pricing

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank. Responsibility for setting interest rates and conducting monetary policy rests with the ECB. Maintaining price stability is its central mandate, whether through containing inflation or supporting growth. Interest rate increases and cuts are its main policy instruments. Higher relative rates, or expectations of an increase, generally support the Euro; the reverse also applies. Monetary policy is decided by the ECB Governing Council at eight meetings each year. The decision-makers comprise the heads of Eurozone national banks and six permanent members, among them ECB President Christine Lagarde.

Inflation’s Influence on the Euro

The Harmonised Index of Consumer Prices (HICP), which measures Eurozone inflation, is a key economic gauge for the Euro. An inflation reading above expectations, particularly one exceeding the ECB’s 2% target, requires the central bank to increase interest rates to regain control of price pressures. When interest rates are high relative to those elsewhere, the Euro typically benefits because global investors find the region a more attractive destination for their funds.

Economic Releases and Euro Performance

By indicating the economy’s health, data releases can move the Euro. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys are among the indicators that can shape the single currency’s direction. Economic strength supports the Euro by drawing in foreign investment. It may also prompt the ECB to raise interest rates, directly strengthening the currency. Weak economic readings, by contrast, are likely to push the Euro lower. Particular attention goes to data from Germany, France, Italy and Spain. As the euro area’s four largest economies, they represent 75% of the Eurozone economy.

Trade Balance Effects on the Euro

The Trade Balance is another release of importance to the Euro. Over a specified period, it compares a country’s export earnings with its spending on imports. Strong overseas demand for a country’s exports creates additional demand for its currency as foreign buyers purchase those goods, lifting the currency’s value. A positive net Trade Balance therefore strengthens a currency, while a negative balance has the opposite effect.

Below 1.1250: EUR/USD Slips, Price Forecast Stays Bearish Below 100-day SMA

1.1160 to 1.1280: UOB Retains EUR/USD Consolidation View

5.6/10: Warsh Highlights Investment and AI Without Policy Commitment

Technical Analysis: 1.1252 Resistance Keeps EUR/USD Under Bearish Pressure