EUR/USD Price Forecast: Gains hold near 1.1250 as bearish bias persists below 100-day average

• At around 1.1245, EUR/USD edges higher in early European trading on Thursday.
• Below the 100-day SMA, the pair retains a bearish outlook, although a neutral RSI leaves scope for further consolidation.
• Resistance lies immediately ahead at 1.1276, while support stands at 1.1185.

Around 1.1245, EUR/USD is posting gains in Thursday’s early European session, although concerns over France’s public finances could constrain further advances. Later on Thursday, European Central Bank (ECB) policymaker Fabio Panetta is due to speak.

For the first time in 24 years, France’s 10-year borrowing costs rose above 5% on Wednesday. Unrest across the country over the weekend, driven partly by cuts to public services, has underscored the political difficulty of bringing budget deficits under control.

Spectra Markets' president Brent Donnelly described the impasse: "The euro cannot sell off—and it cannot rally," adding: "We are in a stalemate where the overhang of bad news just about perfectly offsets the market positioning,"

According to Reuters, the ECB is expected to hold its benchmark rate at 2.5% next week, although markets have almost fully priced in an increase before the end of the year.

In the US, the CME FedWatch tool indicates that traders assign only a slim probability to a Federal Reserve (Fed) rate rise next week. The next increase is expected in December.

EUR/USD stays rangebound despite gas price surge and bond market nerves

The muted response of EUR/USD to energy and bond market developments has drawn attention from analysts at Societe Generale. They describe it as “curious that cycle highs in nat gas prices and bond jitters have not triggered another leg down in a way that would have occurred prior to October.” The pair has stopped responding in its customary way to energy price and bond market swings, with the analysts observing that “the correlations have broken down over the past two weeks or so,”. In the bank’s assessment, this “would suggest that most of the bad news is priced in or investors are not committed to putting on new directional trades, playing the ranges instead.”

Dollar draws support from investment surge and AI optimism as Warsh maintains policy caution

At 5.6 against a historical average of 6.1, the FXS Speechtracker score points to a slightly softer tone from Fed Chair Warsh than the established baseline. His message was moderately constructive, but less forceful. Acknowledging that he was “over-scarred from the Global Financial Crisis” reveals a risk-averse bias, despite his emphasis on a structural upswing in growth and investment. By declining to commit in advance to decisions for October and December, Warsh has preserved considerable policy flexibility. His focus on AI’s effect on demand, alongside the need to “crystalize” output, employment and inflation data, indicates a cautious, data-dependent approach that moderates immediate hawkish expectations for the Dollar.

With a move of 0.00 points, the FXS Fed Sentiment Index held steady at an elevated 127.51. This confirms that the broader policy tone remains firmly hawkish, notwithstanding the slightly softer FXS Speechtracker reading. Taken together, the high index level and Warsh’s unwillingness to prejudge meetings suggest markets should keep pricing in a restrictive bias, without a fresh hawkish impetus for the Dollar in the near term.

Technical Outlook: EUR/USD maintains its near-term bearish bias

Despite modest stabilisation, the daily chart continues to favour a bearish near-term outlook: EUR/USD remains beneath the 100-day Moving Average and slightly below the 20-day Bollinger simple moving average. At around 42, the Relative Strength Index (14) is still under the neutral 50 threshold. This points to a moderation in downward momentum rather than a reversal, with moving-average resistance continuing to cap the pair.

The October 6 high at 1.1276 provides the first resistance on any advance, ahead of the upper Bollinger band at 1.1372. Further up, the 100-day Moving Average near 1.1455 presents a more substantial hurdle; recovering that level would be necessary to alleviate the broader bearish pressure. 

Initial support on a decline lies near 1.1185, the October 19 low, with the lower Bollinger band at 1.1120 next in view. Beyond that, the psychological 1.1000 mark is the key support to monitor. 

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