EUR/USD Price Forecast: Struggles at 1.1600, Breaks Below 100-Day SMA

EUR/USD reversed lower on Monday after briefly touching a one-and-a-half-month high of 1.1614 earlier, then turned down and fell below 1.1600, with the daily close likely near the low of 1.1561. At press time, the pair was trading at 1.15804, struggling around the 100-day simple moving average (SMA).

**100-Day SMA Becomes Key Short-Term Pivot**

On the technical front, EUR/USD stalled near the 100-day SMA after reclaiming the 50-day moving average. According to FXStreet analysis, initial support lies at the 100-day SMA of 1.1570, followed by the middle Bollinger Band near 1.1490; on the upside, immediate resistance is at the upper Bollinger Band of 1.1635. The Relative Strength Index (14) stands at 63, indicating that upside momentum remains solid, but spot is capped by the upper Bollinger Band resistance, with a constructive short-term bias yet warranting caution for a corrective pullback.

**Weak Dollar Provides Support but Momentum Is Limited**

Recent U.S. economic data has been soft, with July retail sales falling 0.6% month-over-month, below the market expectation of a 0.1% increase, compounded by weak CPI and PPI readings, leading traders to scale back bets on Federal Reserve rate hikes. According to the CME FedWatch tool, the market prices a 33.1% probability of a rate hike next month, down from 44% last week. This, in turn, pressures the dollar and provides support for EUR/USD. However, the pair's failure to hold above 1.1600 suggests bullish confidence remains constrained by technical resistance.

**Focus on Breakout Direction Ahead**

If EUR/USD can sustain a break above 1.1600, it will target the 200-day SMA and the 1.1700 level; conversely, a break below the 100-day SMA support could lead to a further pullback toward the middle Bollinger Band near 1.1490. Market views on the euro's short-term outlook are mixed, with the trajectory largely depending on future policy signals from the Federal Reserve and the European Central Bank.