EUR/USD Multi-Week Forecast

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A 'bigger picture' overview of the euro-to-dollar (EUR/USD) outlook.

The EUR/USD is experiencing a gentle downward trend that can continue into year-end as the strong advance of the first half of 2025 unwinds.

A new study of the weekly chart shows the exchange rate reached overbought conditions in H1, and the subsequent pullback has allowed an unwind of that, consistent with FX's mean-reverting tendencies.

The chart shows the pair is now capped by the nine-week exponential moving average (EMA), currently at 1.1615, which tells us the softness is set to stay with us for a while longer.

A series of rebounds over recent weeks have been capped by this momentum indicator, confirming lacklustre euro demand.

This reflects the settled status of European Central Bank policy, where no further rate cuts or hikes are anticipated in the foreseeable future.

We note that EUR/USD tends to trend quite reliably on either side of the nine-week EMA, meaning the recent break below the line could lead to further downside over the coming weeks.

The nine-week EMA had guided the strong uptrend that started in March, taking the pair from 1.04 to a peak of 1.1918 in mid-September.

This puts a drift lower to 1.14 in line for year-end.

Note, weekly ranges since September have been relatively limited: usually, big trends are triggered by big inter-week moves.

So we are more likely in a consolidative phase akin to that of January-August 2024 when the pair drifted sideways around 1.08.

If we are in such a phase then periods of weakness should be relatively contained, as will periods of strength.

Given this, our favoured tactical approach is to trade the pair between 1.14 and 1.17, expecting mean-reverting action on the extremes that would take the exchange rate back to approximately 1.16.