- EUR/USD forecast remains tilted to the upside amid narrowing rate differentials.
- The short-term view remains consolidating, with focus on German IFO data.
- Technical forecast is mildly bearish within the current consolidation, supported by 1.1470, with eyes on 1.1590.
The EUR/USD forecast remains slightly up on Monday, as renewed odds of a December Fed rate cut have pressured the US dollar. The pair stays steady above the 1.1500 level as the Dollar Index pulls back while the ECB’s interest rate outlook remains stable.
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The New York Fed President William’s comments suggested that labor market risks outweigh concerns about inflation. This pushes rate cut expectations, with markets reacting swiftly. The CME FedWatch tool now shows a 70% probability of a rate cut, up from 30% last week.
Still, the Fed’s outlook remains mixed, with other officials, such as Lorie Logan and Susan Collins, cautioning against premature easing. These comments have limited dollar selling, but the broader narrative tilts toward policy loosening.
On the European side, the ECB is widely expected to keep interest rates unchanged in December, supported by stable inflation at around 2% and resilient labor markets. This has kept the EUR/USD safe from downside shocks.
Markets now focus on Germany’s IFO Business Climate Survey, projected to tick up to 88.5. Before the data release, the pair appears to be supported by a firm ECB, reigniting speculation about Fed rate cuts.
Strategists maintain a positive medium-term outlook for the euro, as Danske Bank expects the pair to move to 1.2200 over the next 12 months, as rate differentials narrow. Meanwhile, Morgan Stanley forecasts 1.23 by mid-2026 but anticipates a subsequent pullback.
Key Events Ahead
- Germany IFO Business Climate – Monday
- US September PPI – Tuesday
- US Retail Sales – Tuesday
- FOMC Speakers – Throughout the Week
- Eurozone confidence and sentiment surveys – Later in the week
EUR/USD Technical Forecast: Range-bound Above 1.1500
The EUR/USD 4-hour chart shows a mild bearish tilt as the price remains below the 20-period MA but is supported by the 1.1500 level ahead of swing low support near 1.1470. The RSI staying below the 50.0 mark, pointing south, suggests more weakness.
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However, the overall trend remains one of consolidation, looking for a catalyst to trigger a breakout. If a bullish surprise occurs, the price could test the ultimate resistance near the 200-period MA at 1.1590.
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