Introduction to EUR/USD Analysis
The EUR/USD exchange rate began the week on a positive note, rebounding toward the 1.1769 resistance level. Bulls are attempting to return to the 1.1800 psychological resistance area, a level critical for preparing for stronger upward breakouts. The Euro is currently capitalizing on the market’s primary focus on Federal Reserve expectations rather than Eurozone policy.
Current Market Trends
The overall trend for EUR/USD is currently in an upward technical correction. Key support levels for EUR/USD include 1.1710, 1.1650, and 1.1580, while resistance levels are at 1.1800, 1.1860, and 1.2000.
EUR/USD Trading Signals
Trading signals for EUR/USD suggest the following:
- Buy EUR/USD from the support level of 1.1660 with a target of 1.1820 and a stop-loss at 1.1590.
- Sell EUR/USD from the resistance level of 1.1830 with a target of 1.1500 and a stop-loss at 1.1900.
Technical Analysis
Technical indicators confirm a shift in the EUR/USD trend, with the 14-day Relative Strength Index (RSI) hovering around 65, close to the overbought level, and the MACD indicator also trending upwards. The strong buying pressure from technical indicators is prompting bulls to push quickly towards the psychological resistance level of 1.2000.
Factors Influencing EUR/USD
Expectations for further monetary easing by the Fed in 2026 continue to weigh on the US Dollar, even as the European Central Bank (ECB) signals no urgent need for interest rate adjustments. Risks remain tied to US economic growth, inflation, and political pressure on the Federal Reserve. Today’s EUR/USD trading will be influenced by the release of US economic growth figures and durable goods orders data.
Trading Advice
Traders are advised to wait for market and investor reactions to the important US economic announcements, as this reaction will determine the direction of currency prices for the remainder of 2025 trading. Therefore, it is not recommended to keep positions open during the holiday season.
Expectations from Banks and Institutions
Nordea Bank expects the EUR/USD exchange rate to rise to 1.24 by the end of 2026. HSBC expects EUR/USD to rise to 1.20 at the beginning of 2026 before retreating to 1.18 by the end of the same year. Société Générale commented that maintaining the 50-day moving average near 1.1610 will be crucial for the continuation of the upward trend.
European Central Bank Policies
The European Central Bank made no changes to interest rates at its latest meeting, keeping the deposit rate at 2.00%. Eurozone growth expectations have seen a slight improvement, while inflation is expected to remain around 2.00% over the medium term. ECB President Lagarde stated that there is no pre-determined path for interest rates.
US Federal Reserve Policy
Financial markets continue to expect further US interest rate cuts by the Federal Reserve in 2026 following the decline in inflation. The unemployment rate has reached a four-year high of 4.6%, while US jobs data overall has been mixed. Nordea Bank expects the US dollar to weaken by 2026, as growth differentials and political uncertainty turn against it.
Conclusion
In conclusion, the EUR/USD exchange rate is experiencing an upward technical correction, influenced by expectations of monetary easing by the Fed and the ECB’s stance on interest rates. Traders should be cautious and wait for market reactions to important US economic announcements before making trading decisions. With various banks and institutions providing their forecasts for the EUR/USD exchange rate, it is essential to stay informed and adapt to the changing market conditions.
