The euro struggled to hold above $1.1200 on Friday as investors weighed stronger-than-expected eurozone growth against the European Central Bank’s warning that expensive energy threatens both inflation and economic activity.
EUR/USD traded around 1.1186 at 12:37 GMT, up 0.09%, after reaching 1.1215 earlier in the session. Falling US Treasury yields helped the currency recover, but the retreat below its 20-day moving average left buyers facing resistance.
The question heading into November is whether the euro can build on its recovery from Thursday’s low near 1.1105 or whether renewed dollar demand will push it back towards that level.
EUR/USD Today: Why the Euro Lost Ground Above 1.1200
Friday’s move above 1.1200 brought EUR/USD into its declining 20-day moving average, a level the pair had struggled to regain during October’s selloff.
The subsequent retreat shows that the initial recovery has yet to attract enough buying to hold above that area. It does not erase the rebound from Thursday’s low, but it leaves the euro trading within its recent range.
That distinction matters after the sharp decline from September. A stronger opening followed by a retreat can reflect profit-taking or renewed selling near resistance. A daily close above Friday’s high would offer more convincing evidence that demand is improving.
ECB Interest Rate Decision Leaves December Hike in Play
The ECB held its three key rates unchanged on Thursday, keeping the deposit rate at 2.50%. Its warning about rising energy costs nevertheless left the possibility of further tightening open.
Policymakers said the energy shock was likely to push inflation higher and weaken growth. Underlying inflation had remained broadly stable, however, and wages had not shown a material response to higher prices.
For the euro, the message offers support without guaranteeing another increase. Evidence that energy costs are spreading into other prices would strengthen the argument for tighter policy. The complication is that borrowing conditions have already tightened. Raising rates further could reinforce inflation control while adding pressure to businesses, households and heavily indebted governments.
Eurozone GDP Growth Beats Expectations
Friday’s growth figures gave investors a reason to reassess the region’s resilience. Eurozone GDP increased 0.4% in the third quarter, twice the 0.2% forecast in a Reuters poll. Annual growth reached 1.3%, exceeding expectations for 1.1%. The quarterly pace nevertheless slowed from 0.6% in the preceding period.
The national figures showed an uneven expansion. Germany grew 0.2%, Spain and the Netherlands each gained 0.6%, while Italy stagnated and France contracted 0.1%. The stronger headline reduces concerns about an immediate regional slowdown. France’s contraction, however, underlines why the ECB must balance inflation risks against pockets of economic weakness.
For EUR/USD, the report supports the euro’s recovery, although it has not yet produced a sustained break above 1.1200.
Falling US Treasury Yields Reduce Dollar Support
US Treasury yields declined during European trading on Friday, easing one of the pressures that had weighed on the euro. The two-year yield fell approximately 5.8 basis points to 4.597%, while the 10-year yield dropped about 5.2 basis points to 4.936%, The Wall Street Journal reported.
Lower yields can reduce the return available on dollar assets and help competing currencies recover. However, the dollar retains support from comparatively high US interest rates. The euro therefore needs more than a single session of falling yields. A continuing decline in the US yield advantage would provide a stronger foundation for further gains.
EUR/USD Technical Analysis: 1.1215 Resistance Holds
The immediate hurdle is the 1.1200–1.1215 zone, which includes the 20-day moving average near 1.1199 and Friday’s high. A daily close above it would bring 1.1250 into view, followed by 1.1300.
Momentum is improving. The MACD line has crossed above its signal line, and the histogram is positive. Both lines remain below zero, suggesting that selling pressure is easing while the broader recovery remains unconfirmed. Initial support sits near 1.1175, followed by 1.1150. Below those levels, Thursday’s low around 1.1105 becomes the main downside reference.
EUR/USD Forecast: What Could Drive the Euro in November?
The euro enters November with stronger growth data behind it, but a difficult inflation outlook ahead. Further gains would be easier to sustain if European activity remains resilient while US yields continue to ease. Conversely, renewed growth concerns or a rebound in Treasury yields could restore the dollar’s advantage. For now, 1.1200–1.1215 separates the latest bounce from a more convincing recovery.
How does the ECB decision affect EUR/USD?
Expectations for higher European rates can support the euro. The effect also depends on Federal Reserve expectations and the relative strength of both economies.
Could EUR/USD fall below 1.1100?
A break below Thursday’s low near 1.1105 would expose 1.1100. Holding above that low would preserve the current recovery attempt.
Is EUR/USD bullish or bearish today?
The pair is recovering, but remains near a declining 20-day moving average. Momentum has improved without confirming a broader bullish reversal.
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