EURUSD Forecast: Recovery Stalls Ahead of ECB Interest Rate Decision

EURUSD Recovery Stalls Ahead of ECB Decision

The EURUSD recovery appears to be losing momentum during the London trading session as the pair turns lower near a key technical level. Market participants are becoming increasingly cautious ahead of the upcoming ECB interest rate decision, which is expected to be a major driver for the euro dollar exchange rate.

The latest price action comes after traders assessed broader forex market trends, including the temporary relief in US dollar strength following concerns around the US government shutdown. Despite this, the EURUSD price action suggests hesitation as investors shift focus to European Central Bank news and the potential impact of ECB on EURUSD.

According to current ECB meeting expectations, the European Central Bank is widely expected to keep interest rates unchanged at 2.15%. As a result, the market reaction is likely to be driven more by Lagarde’s tone and guidance, particularly around ECB monetary policy and the timing of future rate cuts. With inflation across the Eurozone still showing signs of stickiness, policymakers may signal a cautious stance, influencing short-term EURUSD forecast and volatility.

In addition, traders are closely monitoring Eurozone economic data and broader EU economic indicators, which remain key inputs for shaping expectations around monetary easing and overall forex trading EURUSD sentiment.

EURUSD Technical Outlook

From a technical perspective, EURUSD technical analysis shows the pair continuing to drift lower after failing to sustain bullish momentum above the 1.2000 psychological level. The price remains confined within a descending channel, highlighting ongoing bearish pressure as the market waits for fresh catalysts from the ECB decision impact.

On the upside, the upper boundary of the channel acts as immediate resistance. A confirmed break above the near-term EURUSD support resistance level at 1.18361 could open the door for further gains toward 1.18693. Such a move may improve the short-term EURUSD daily outlook and support a bullish EURUSD trading strategy if supported by dovish ECB signals.

On the downside, initial support is seen around 1.17768. If selling pressure persists and buyers fail to step in, the pair could extend losses toward the next downside target near 1.17312. This scenario would align with a bearish EURUSD price forecast, especially if the market reaction ECB turns hawkish.

Overall, traders should remain cautious and flexible, combining EURUSD price action analysis with upcoming ECB decision impact and macro developments to refine their EURUSD trading strategy in the days ahead.