The EUR/USD pair is currently positioned within the 1.1730–1.1750 range, following a retracement from last week’s peak near 1.1760–1.1762, marking the highest level observed in approximately two months. The pair momentarily exceeded 1.1750 before retreating to the 1.1730–1.1740 range, yet the price continues to hold above last week’s lows and significantly above the mid-November support level. On intraday charts, EUR/USD is maintaining its position above the 50-hour EMA near 1.1726 and the 100-hour EMA around 1.1705, indicating that short-term control remains with buyers, rather than new dollar longs. The macroeconomic environment for EUR/USD is primarily influenced by the Federal Reserve. The US central bank has implemented its third 25 basis point reduction of 2025, adjusting the funds range to 3.50%–3.75%. The current futures market indicates approximately a 76% likelihood that interest rates will remain steady at the January 2026 meeting, an increase from around 70% prior to the latest decision. The dollar is impacted by that shift. The US Dollar Index is currently positioned around 98.35 within a defined descending channel, trading below the 50-EMA at approximately 99.20 and the 100-EMA near 99.30. This indicates a prevailing dominance of sellers, with any upward movements appearing to be corrective in nature. Current DXY support is positioned at approximately 98.10, followed by 97.80, with a further target of 97.45 should selling pressure continue. Provided the index remains constrained below 98.95–99.30, EUR/USD is positioned to maintain support above 1.17.
In Europe, the single currency is experiencing an advantage due to a premium associated with relative stability. Market perceptions indicate that the ECB is nearing the conclusion of its easing cycle, contrasting with the Fed’s position. In certain scenarios, there is even speculation about potential limited tightening in 2026, should inflation remain persistent. The Federal Reserve has implemented three rate cuts and is currently vulnerable to weaker economic indicators in the US. In contrast, the European Central Bank is expected to maintain its current policy stance for the upcoming year, with a rate reduction largely factored out of market expectations. The observed divergence reinforces the potential for EUR to strengthen during pullbacks. The return to the 1.17 level effectively reverses a significant portion of the risk-off decline observed in the autumn, now appearing more as a systematic bullish correction rather than a temporary spike. From a technical perspective, EUR/USD is currently in an upward corrective phase, exhibiting a distinct bullish bias. On the daily chart, the pair has recently reached resistance at approximately 1.1762 and is currently oscillating in the range of 1.1733 to 1.1750. The 14-day RSI has advanced to 67, approaching the 70 overbought level, indicating robust upward momentum without a clear blow-off signal. The MACD lines are trending upward, supporting the likelihood of continued movement, provided that macroeconomic data does not alter the current rate outlook. On the 4-hour chart, EUR/USD is positioned above the 50-EMA in the range of 1.1685–1.1726 and the 100-EMA located around 1.1620–1.1705. The previous multi-week upward trend has been breached to the upside, with the former breakout level near 1.1720 now acting as initial support. The RSI for this timeframe is currently positioned within the 57–65 range, indicating ongoing bullish momentum while avoiding any extreme levels.
Support levels are precisely structured and clearly delineated. Immediate support is positioned at 1.1720–1.1725, which represents the previous breakout zone that the price is currently testing from above. Several models indicate that the next critical range is 1.1707–1.1690, integrating Fibonacci structure with recent intraday lows. The wider daily chart subsequently descends to 1.1690, 1.1620, and 1.1540, establishing a more substantial support framework should volatility increase. One tactical framework you provided indicates a buy zone at 1.1640, with an upside target set at 1.1850 and a protective stop at 1.1580. This effectively positions the 1.1640–1.1580 range as the threshold for reassessing the medium-term bullish outlook. The market is currently observing a series of proximate resistance levels on the upside. The recent advance encountered resistance in the 1.1760–1.1763 range, establishing this area as the initial ceiling. Additionally, the tactical plan indicates 1.1810 as a sell zone, with a downside target set at 1.1500 and a stop at 1.1900, identifying the range of 1.1810–1.1900 as the primary resistance level to overcome. The overall daily framework indicates incremental resistance levels at 1.1790, 1.1830, and 1.1900, while the key psychological level of 1.2000 serves as a significant target for 2026, contingent upon the euro maintaining closes above 1.1800. Currently, buying interest is observed on dips above the 1.1690–1.1720 range, whereas upward movements towards 1.1760–1.1810 continue to encounter profit-taking and tactical short positions.
The behavior across various asset classes supports the existing EUR/USD configuration. The US Dollar Index remains within its descending channel, facing resistance from the 50-EMA around 99.20 and the 100-EMA at approximately 99.30, as sellers consistently guard against any attempts to breach the 98.95–99.30 range. Currently, global risk assets are not indicating a crisis: US and European indices are trading close to their highs, and gold remains above 4,300 dollars per ounce while testing resistance levels between 4,345 and 4,381. This scenario aligns more with a strategy of policy and currency hedging rather than a scenario of forced deleveraging. In such a scenario, a weaker dollar alongside strong risk sentiment generally allows EUR/USD to remain above 1.17, unless an unexpected data release prompts a shift back into USD cash. The short-term trajectory of EUR/USD is focused on several key macroeconomic events with binary outcomes. The upcoming US labor data, which encompasses Nonfarm Payrolls, average hourly earnings, and the unemployment rate, will play a crucial role in determining the trajectory of Fed-cut expectations, potentially leading to either a reduction or an increase in market sentiment. Robust employment and wage figures are likely to drive yields upward, provide support for the dollar, and initiate a challenge at 1.1705, 1.1685, and possibly the 1.1650–1.1640 range. Weaker data could lead to a decline in yields and the dollar, providing EUR/USD with another opportunity to reach 1.1760, 1.1790, and potentially 1.1810.
The ECB meeting and press conference will assess the euro’s ability to maintain its policy advantage. A message of patience without a renewed easing bias would support the notion that rate cuts are unlikely in 2026, providing buyers with increased confidence to target the 1.1830–1.1900 range; any unforeseen dovish shift would limit the pair within the 1.1690–1.1810 consolidation zone. When considering the current landscape — the Federal Reserve’s rate positioned at 3.50%–3.75% following three reductions, market expectations indicating a 76% likelihood of stability in January 2026, the DXY remaining in a downward trajectory around 98.35, and EUR/USD trading above the 50-EMA at approximately 1.1685 and the 100-EMA near 1.1620, while the RSI fluctuates between 57 and 67 — the overall analysis suggests a bullish inclination. The current structure suggests that pullbacks into the 1.1720–1.1690 range, and more assertively into 1.1640, should be viewed as opportunities to establish positions for a potential upward movement toward 1.1790–1.1850, and possibly reaching 1.1900–1.2000, contingent on favorable macro data and ECB communications. The bullish scenario begins to significantly deteriorate if EUR/USD breaks and maintains a position below 1.1680 initially, followed by 1.1620. This would indicate that the corrective uptrend from late November has concluded and that the pair is transitioning into a more substantial retracement phase.