EUR/USD is currently positioned at $1.1720, reflecting an increase of nearly 0.8% over the past two sessions, following the Federal Reserve’s third consecutive 25 basis points rate cut, which has led to a depreciation of the US Dollar. The Federal Reserve has lowered the funds range to 3.50%–3.75%, marking its lowest level in three years, following an unusual 9–3 vote split — with two members opposing any reduction and one advocating for a 50 basis points adjustment. Despite the internal division, the Dollar Index extended its decline toward $98.50, pressured by a dovish tone and weaker yields, and the Federal Reserve has revealed a $40 billion monthly Treasury buyback, catching markets off guard with additional liquidity support that has further devalued the USD and driven EUR/USD to a three-week peak. The European Central Bank remains steadfast in its position, with President Christine Lagarde reiterating that Eurozone policy is “in good shape,” suggesting possible upward adjustments to growth forecasts — a distinct contrast to the Fed’s easing cycle. With the Fed adopting a more lenient approach and the ECB maintaining its course, the rate differentials are narrowing, benefiting the Euro, and market participants are currently perceiving a reduced downside risk for the euro, anticipating that the pair will remain buoyed above the $1.1650 level as the divergence between a Fed maintaining rates around 3.6% and an ECB indicating no reductions is steering capital towards European assets.
On the daily chart, EUR/USD has surpassed resistance at $1.1680, indicating a confirmed short-term bullish breakout. The pair is currently positioned within a rising channel that has been in place since mid-November, with both the 20-day EMA and 200-day EMA demonstrating an upward slope, while the RSI is currently at 61, indicating robust momentum without reaching overbought levels, and the MACD histogram displays a green indication on both the 4-hour and daily timeframes, suggesting ongoing strength. Immediate resistance levels are identified at $1.1730, $1.1760–$1.1780, and $1.1800, with support levels positioned at $1.1680, $1.1620, and $1.1570–$1.1490, and provided that EUR/USD remains above $1.1620, the technical framework supports bullish sentiment, aiming for a target range of $1.1800–$1.1880. Attention is directed towards US Initial Jobless Claims, anticipated to be 220,000 compared to the previous figure of 191,000, while the 4-week average stands at 214,750, and a weaker labor report may indicate that the Federal Reserve is not keeping pace with a decelerating economy, which could lead to a decline in the Dollar and drive EUR/USD above $1.1730 toward $1.1780. However, if jobless data remains steady around 190,000, the USD may experience a temporary rebound, pushing EUR/USD down to $1.1650–$1.1620, and market participants are closely monitoring this data to evaluate if the Federal Reserve’s trajectory for rate cuts will gain momentum in early 2026 or come to a halt.
The Fed’s $40B Treasury repurchase plan introduces liquidity, all while upholding a prudent stance beyond rate policy, and this quasi-QE measure is consistent with Powell’s “wait and see” strategy, yet it diminishes the carry appeal of the Dollar. Meanwhile, speculation intensifies regarding potential leadership shifts at the Fed, as markets are factoring in the likelihood of Kevin Hassett succeeding Powell in May, with Hassett perceived as more dovish and potentially prolonging the USD decline into the first half of 2026. The ongoing policy divergence between the Fed and ECB is providing support for EUR/USD, which is currently up approximately 2.1% month-to-date. In light of the fluctuations observed in tech stocks following Oracle’s significant decline, it appears that risk sentiment across Europe has found a degree of stability, with European equities showing a positive trend, whereas US futures are experiencing a slight downturn. This partial rebound bolsters EUR/USD, as the Euro benefits from enhanced local sentiment and a depreciating Dollar, and provided that risk aversion does not intensify into a worldwide selloff, EUR/USD is likely to uphold its positive trend toward $1.18.
Buyers are gathering in the range of $1.1620 to $1.1570, where demand has consistently surfaced. If the pair maintains closes above $1.1730, technical models indicate a potential continuation toward $1.1800–$1.1880, and only a drop below 1.1570 would shift momentum back to neutral. Currently, all indicators — rate differentials, technical structure, and sentiment — support the notion of ongoing Euro strength.