Euro Forecast: EUR/USD Continues to Coil Within January Range

Euro Outlook: EUR/USD

EUR/USD may break out of the January range as it attempts to extend the advance from the start of the week, but the exchange rate may consolidate over the remainder of the month should it track the flattening slope in the 50-Day SMA (1.0391).

Euro Forecast: EUR/USD Continues to Coil Within January Range

EUR/USD approaches the January high (1.0533) again as European Central Bank (ECB) board member Isabel Schnabel warns that ‘maintaining price stability will require higher real interest rates in the future than before the pandemic,’ with the official going onto say that ‘over the past year, the degree of policy restraint has declined appreciably – to a point where we can no longer say with confidence that our policy is restrictive.’

Join David Song for the Weekly Fundamental Market Outlook webinar.

In turn, Schnabel argues ‘the fact that growth remains subdued cannot and should not be taken as evidence that policy is restrictive’ while speaking at an event held by the Bank of England (BoE), and it seems as though the ECB will switch gears at a slower pace as ‘higher real interest rates seem to be the most likely scenario for the future.’

With that said, waning speculation for another ECB rate-cut may keep EUR/USD afloat, but the exchange rate may track the flattening slope in the 50-Day SMA (1.0391) should it struggle to push above the January high (1.0533).

EUR/USD Chart – Daily

Chart Prepared by David Song, Senior Strategist; EUR/USD on TradingView

EUR/USD holds above the 1.0448 (2023 low) to 1.0480 (100% Fibonacci extension) zone to trade near the monthly high (1.0528), with a breach above the January high (1.0533) raising the scope for a move towards the 1.0580 (78.6% Fibonacci extension) to 1.0610 (38.2% Fibonacci retracement) region.
Next area of interest comes in around the December high (1.0630), but EUR/USD may struggle to retain the advance from earlier this month should it fail to push above the January high (1.0533).
Lack of momentum to hold above the 1.0448 (2023 low) to 1.0480 (100% Fibonacci extension) zone may push EUR/USD back towards 1.0370 (38.2% Fibonacci extension), with the next area of interest coming in around the monthly low (1.0211).

Additional Market Outlooks

Australian Dollar Forecast: AUD/USD Falls from Channel Resistance

USD/JPY Halts Three-Day Selloff to Keep RSI Above Oversold Zone

US Dollar Forecast: GBP/USD Approaches Channel Resistance

Canadian Dollar Forecast: USD/CAD Coils Ahead of Trump Tariffs

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.