EUR/USD Price Forecast: Buyers retake control as double bottom forms

1.1200 cleared by EUR/USD. US midterm election results put the US Dollar under pressure.
Near 1.1100, a possible double bottom is taking shape as buyers challenge neckline resistance at 1.1250-1.1270.
While longer-term SMAs still sit above the price, RSI and MACD point to strengthening momentum.

EUR/USD trades near 1.1257 at the time of writing. The pair is up more than 0.50% on the day, drawing renewed buying interest on Wednesday as US midterm election results unsettle the US Dollar (USD). That pressure has helped the Euro (EUR) recover the 1.1200 level. Improving technical conditions also suggest buyers are re-establishing control after last week's low of 1.1104, a level not seen since May 2025.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

A possible double bottom around 1.1100 is visible on the EUR/USD daily chart. The latest rise has brought its neckline at 1.1250–1.1270 into play. A move above the 21-day Simple Moving Average (SMA) at 1.1196 has given buyers a degree of near-term control. However, the pair continues to trade beneath both the 100-day and 200-day SMAs.

With the Relative Strength Index (RSI 14) around 52, momentum has strengthened. The Moving Average Convergence Divergence (MACD) has moved into positive territory and is advancing above its signal line. Although these readings favour the recovery, trading below the longer-term averages means a broader bullish reversal is not yet confirmed.

Confirmation of the double-bottom pattern requires a sustained break through the neckline. That would clear a path towards 1.1350, a former support level that could now provide resistance. Beyond it, the 100-day SMA at 1.1421 and the 200-day SMA at 1.1548 present further obstacles. Clearing those averages would undermine the wider bearish outlook.

Initial downside support lies at 1.1200 and the nearby 21-day SMA. Losing this zone would erode the recovery and return attention to the base at 1.1100. Should the pair remain below that base, the double-bottom formation would be invalidated, exposing EUR/USD to additional declines.

Euro: Key Questions

The Euro at a Glance

Used by the 20 European Union countries within the Eurozone, the Euro ranks behind only the US Dollar in global currency trading. Its share of all foreign exchange transactions reached 31% in 2022, with average daily turnover exceeding $2.2 trillion. An estimated 30% of all transactions involve EUR/USD, making it the world's most actively traded currency pair. EUR/JPY follows at 4%, ahead of EUR/GBP (3%) and EUR/AUD (2%).

The ECB’s Role in the Euro

Based in Frankfurt, Germany, the European Central Bank (ECB) serves as the Eurozone’s reserve bank, setting interest rates and overseeing monetary policy. Maintaining price stability is its core mandate, whether through containing inflation or supporting growth. Interest rate increases and reductions are its main policy instrument. Higher relative interest rates, or expectations of an increase, typically support the Euro; the reverse also applies. Monetary policy is decided by the ECB Governing Council at eight meetings each year. The decision-makers comprise the heads of Eurozone national banks and six permanent members, among them ECB President Christine Lagarde.

Inflation’s Effect on the Euro

The Harmonized Index of Consumer Prices (HICP), which tracks Eurozone inflation, is a key economic gauge for the Euro. Inflation exceeding expectations, particularly when above the ECB’s 2% target, requires the ECB to increase interest rates to bring price growth back under control. By making the region a more attractive destination for global investors’ funds, interest rates that are high relative to those elsewhere generally support the Euro.

Economic Data and the Euro

The Euro can react to economic releases because they reveal the economy’s underlying health. GDP, Manufacturing and Services PMIs, employment figures and consumer sentiment surveys can each shape the single currency’s direction. Economic strength supports the Euro by drawing in foreign investment. It may also prompt the ECB to raise interest rates, directly strengthening the currency. Weak economic readings, by contrast, are likely to weigh on the Euro. Germany, France, Italy and Spain together represent 75% of the Eurozone’s economy. As the euro area’s four largest economies, their data carry particular weight.

The Trade Balance and the Euro

The Trade Balance is another closely watched release for the Euro. Over a specified period, it captures the gap between a country’s export earnings and its import spending. Strong overseas demand for a country’s exports creates additional demand for its currency as foreign buyers seek to purchase those goods, lifting its value. A positive net Trade Balance therefore supports a currency, while a negative balance has the opposite effect.