EUR/USD Price Forecast: Bearish bias persists below 100-day SMA despite holding gains above 1.1200

• Around 1.1220, EUR/USD edges higher in early Asian trading on Monday.
• Below the 100-day moving average, the pair remains under pressure as RSI momentum stays bearish.
• At 1.1270, the pair faces its first resistance, while initial support stands at 1.1185.

Falling US Treasury bond yields, as the bond rally extends, leave the US Dollar (USD) softer against the Euro (EUR). EUR/USD consequently remains in positive territory around 1.1220 in early European trading on Monday. Attention now turns to interest rate decisions from the US Federal Reserve (Fed) and the European Central Bank (ECB) later this week.

In the previous session, the 10-year US Treasury yield declined to 4.97%, while the 30-year bond yield stood at 5.299%, close to one-month lows. Ray Attrill, head of FX strategy at National Australia Bank, said: "For the time being, it seems to point to the US bond market being in the driving seat for broader dollar performance,"

With the midterm elections just days away, many analysts expect the Fed to leave interest rates unchanged. According to the CME FedWatch tool, markets currently assign a nearly 90.6% probability to rates remaining on hold at Wednesday’s upcoming October meeting. The probability of a US central bank rate increase in December stands at 79.4%.

For the single currency, however, worries over mounting unrest in France and the deterioration in the country’s budget position could create near-term pressure.

Thursday brings the ECB’s interest rate decision, at which rates are expected to remain unchanged. Following ECB President Christine Lagarde’s comments in late September that a moderate policy response to inflation was appropriate, traders will examine any indications of the future rate path.

Warsh highlights investment strength and AI while leaving the Fed’s policy options open

At 5.6/10, Fed Chair Warsh’s speech registers modestly below the historical average of 6.1/10 on the FXS Speechtracker. The reading points to caution, notwithstanding positive references to structural growth and a surge in investment. By referring to being “over-scarred from the global financial crisis”, Warsh reveals a continuing preference for risk management and financial stability. At the same time, he stresses the strength of policy-driven investment and declines to prejudge the upcoming October and December meetings. His focus on AI’s effects on demand, confidence in the data and the November field hearing indicates a forward-looking approach. Without explicit guidance, however, the speech remains balanced rather than clearly hawkish.

A move of 0.00 points left the FXS Fed Sentiment Index at 127.51, suggesting the speech brought no material change in perceptions of the policy bias. The reading remains firmly above 100 and therefore in hawkish territory. Its stability indicates that Warsh’s remarks mainly reaffirmed the policy narrative already reflected in the FXS Speechtracker.

Technical outlook: EUR/USD remains under pressure below the 100-day SMA

Trading below both the 100-day simple moving average (SMA) and the upper Bollinger band leaves EUR/USD with a bearish near-term outlook on the daily chart. Just above the current price, the middle Bollinger band provides immediate resistance as the pair tests that area. Meanwhile, a 14-day Relative Strength Index reading of around 40 points to subdued, still-bearish momentum, rather than an outright oversold market.

A recovery would first encounter resistance at 1.1270, the high recorded on 16 October, before reaching the upper Bollinger band at 1.1315. If trading holds above that level, the way could open towards the 100-day SMA at 1.1450. A break above the average would be required to relieve the broader downward pressure.

Initial support lies at 1.1185, the low of 23 October, ahead of the lower Bollinger band near 1.1138. A decisive break below that floor would leave the psychological level of 1.1100 in view. 

(The technical analysis of this story was written with the help of an AI tool. Know more.)