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- EUR/USD Price Forecast: 1.1000 appears to be a tough nut to crack for buyers
EUR/USD Price Forecast: 1.1000 appears to be a tough nut to crack for buyers
- EUR/USD holds positive ground near 1.0920 in Monday’s early European session.
- The pair keeps the positive vibe above the 100-day EMA, with a bullish RSI momentum indicator.
- The immediate resistance level emerges at 1.0973; the Initial support level is located at 1.0881.
The EUR/USD pair trades with mild gains around 1.0920 during the early European session on Monday. The uptick of the major pair is backed by the consolidation of the US Dollar (USD). Investors await the German August ZEW survey on Tuesday for fresh impetus.
Expectations are expected to arrive at 31.8 versus 41.8 in July, while the current assessment is expected to show -75.0 versus -68.9 prior. The weaker-than-expected data will contribute to a negative outlook in the economy and might keep the European Central Bank (ECB) in easing mode, with a September 12 rate cut fully priced in.
According to the daily chart, the bullish outlook of EUR/USD prevails as the major pair remains well above the key 100-day Exponential Moving Average (EMA). Additionally, the 14-day Relative Strength Index (RSI) holds in bullish territory near 58.60, indicating the potential upside in the near term.
The first upside barrier emerges near the upper boundary of the Bollinger Band around 1.0973. The crucial resistance level is located at the 1.1000-1.1010 region, portraying the confluence of psychological marks and a high of August 5. If the upswing continues, it may take the pair to 1.0981, a high of March 8.
On the other hand, a low of August 9 at 1.0881 acts as an initial support level for EUR/USD. Any follow-through selling below this level will expose the 100-day EMA at 1.0822. A breach of the mentioned would pave the way to 1.0735, a low of June 12.
EUR/USD daily chart
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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