Title: EUR/USD Price Forecast: Bulls Eyeing the 1.1800 Target
Author Credit: Originally written by FXStreet Analyst Haresh Menghani
As of the latest analysis, the EUR/USD currency pair has been showing signs of bullish momentum following a steady recovery against the US dollar. After rebounding from multi-week lows, the euro has regained traction, supported by a combination of factors favoring the shared currency and pressuring the greenback. This article will explore the current technical and fundamental drivers behind the EUR/USD uptrend and evaluate the path ahead, with the next major price target set at the 1.1800 level.
Fundamental Catalysts Driving EUR/USD Higher
Several macroeconomic factors have contributed to the EUR/USD’s climb, reinforcing the belief among investors that the pair could continue to appreciate in the short to medium term.
1. Weakening US Dollar Sentiment
The US dollar has come under pressure due to:
– Expectations that the Federal Reserve may pause or slow down the pace of interest rate hikes
– Dovish tones from recent Fed commentary hinting at a possible shift in policy stance
– Sluggish economic data from the US, signaling potential softness in growth ahead
– Market sentiment leaning away from risk aversion, which typically benefits higher-yielding currencies like the euro
2. Resilience in the Eurozone Economy
Despite recent challenges, the Eurozone economy has shown relative stability:
– Better-than-expected GDP data from major economies such as Germany and France
– Improvement in investor sentiment across the EU, bolstered by rebounding PMI figures
– Reduced fears of a deep recession in the bloc, enhancing the attractiveness of the euro
3. Central Bank Divergence
The European Central Bank (ECB) has maintained a cautious but hawkish outlook:
– ECB President Christine Lagarde signaled commitment to curbing inflation, suggesting further monetary tightening may still be on the table
– Diverging trajectories of the ECB and the Fed could support euro appreciation, particularly if US policymakers adopt a looser stance
4. Decline in US Treasury Yields
Lower US Treasury yields have reduced the relative attractiveness of the dollar:
– The benchmark 10-year yield dropping is typically seen as bearish for USD
– Narrowing interest rate differentials favor EUR/USD appreciation
5. Positive Risk Sentiment in Global Markets
A broader rally in risk assets, such as equities, has spurred higher demand for risk-linked currencies like the euro:
– Easing concerns over geopolitical tensions and banking sector instability
– Improved appetite for currencies tied to cyclical growth and risk-on trades
Technical Outlook: EUR/USD Holds Firm Above Key Support Levels
From a technical perspective, the EUR/USD appears to be solidifying its upward trajectory, supported by bullish indicators across multiple timeframes.
Key technical highlights include:
1. Short-Term Momentum
– EUR/USD has broken above important resistance zones near 1.0700 and is now trading comfortably above the 50-day and 200-day moving averages
– The upside move is supported by a rising Relative Strength Index (RSI) on the daily chart, suggesting momentum remains firmly in favor of buyers
2. Immediate Support and Resistance Levels
– Support:
– 1.0725: Recent breakout zone that should now act as immediate support
– 1.0680: A confluence of moving averages offering cushion on pullbacks
– Resistance:
– 1.0780: Minor barrier that was tested recently
– 1.0850: A key horizontal level tested several times in the past weeks
– 1.0950: Mid-June high and psychological resistance
– 1.1000: Round-figure mark watched closely by technical traders
3. Long-Term Target: 1.1800
– The next major projected target is at
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