EUR/USD Price Forecast: Gains ground to near 1.1600, bullish vibe prevails above 100-day SMA

Market impact: Mixed, with a modest short-term bullish bias for EUR/USD but clear upside risk.

EUR/USD holding near 1.1590 and remaining above the 100-day SMA around 1.1570 supports a constructive technical setup. A sustained break above the 20-day Bollinger midpoint could shift momentum toward 1.1677, with the upper band near 1.1710 becoming the next technically relevant zone. Conversely, a move back below 1.1570 would weaken the bullish structure and expose 1.1511, followed by the lower Bollinger band near 1.1480.

The more important fundamental force is the renewed hawkish repricing of Federal Reserve policy. Kevin Warsh’s warning that inflation progress remains insufficient raises the prospect of either additional tightening or a longer period of restrictive US rates. That should support Treasury yields and the US dollar, creating a headwind for EUR/USD rallies even while the pair remains technically supported.

The immediate binary catalyst is Germany’s preliminary CPI release. A hotter-than-expected reading could lift EUR/USD by increasing expectations that the ECB will maintain a restrictive stance, while also reinforcing the euro’s relative-rate support. A softer reading would remove that near-term euro catalyst and leave the pair more exposed to the Fed-driven dollar bid.

Trading interpretation:

the setup favors upside continuation only if EUR/USD can absorb the hawkish Fed shock and clear the 1.1677 resistance area. Failure near that zone would suggest the move is a corrective euro rebound rather than a broader trend extension. The key risk to the bullish view is a further rise in US rate expectations, particularly if upcoming US inflation, labor-market, or activity data validate Warsh’s concerns.

What to monitor next:

German CPI, US inflation and employment data, movements in US–German yield spreads, Fed communication, and whether EUR/USD holds above 1.1570 on a closing basis.