EUR/USD Forecast: Upside Intact Despite Geopolitical Risks

• The EUR/USD forecast is bullish despite a pause in the uptrend.
• SocGen aims for a quicker test of 1.2000 amid US tariffs and a dovish Fed.
• Geopolitical tensions and the FOMC meeting are key stimuli for the markets to watch.

The EUR/USD forecast remains firm around the mid-1.1500 after testing the multi-month top at 1.1632. However, the pair came under pressure as the Middle East crisis reemerged on Tuesday after hopes of de-escalation fade out.

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According to SocGen, the EUR/USD is resilient despite the recent global shocks, which shows the pair is underpinned primarily due to structural weakening of the US dollar. Hence, the price may test the 1.2000 level faster than expected.

President Trump’s imposed tariffs on key trade partners have refueled the fears of a global trade war. The news, paired with the worsening Middle East conflict, triggered a wave of risk aversion. However, the Greenback could not perform as it used to during crises. The dollar index is at 3-year lows near 98.00, which suggests the currency sees a diminishing interest in the dollar’s safe-haven status.

Investors are now looking at the Federal Reserve’s interest rate decision due on Wednesday. The Fed is widely expected to hold the rates. However, the economic projections are important to watch along with the dot plot, which could add further pressure on the US dollar, especially when the outlook is weak and inflation shows cooling signs.

On the data front, the European ZEW Economic Sentiment Index data could not leave any impact on the pair. The macro narrative is largely driven by the US trade policies, global risk events, and the Fed’s monetary policy guidance. Against this backdrop, the EUR/USD stays comfortably above the 1.1500 mark, suggesting a sentiment shift in favor of the Euro.

EUR/USD Technical Forecast: Consolidation Before a Breakout

The EUR/USD price remains consolidating in a small symmetrical triangle above the 1.1550 area. The pair is now wobbling around the 20-period SMA on the 4-hour chart. The pair shows a slight pause in the bullish momentum. A breakout above 1.1600 would confirm an upside continuation towards 1.1650 to 1.1700. Although the RSI value is above 50, it’s moving sideways, suggesting a choppy move and lacking any impetus.

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On the downside, the pair seems well supported by the 1.1500 figure. Breaking the level may attract more sellers and push towards 1.1400. Overall, the 1.1500 area remains a pivot point for the pair.

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