EUR/USD is currently positioned between 1.1770 and 1.1780, just under 30 pips from the recent two-month peak of 1.1804. The price is positioned in the upper section of an ascending channel that has directed the pair upward since late November, displaying a distinct pattern of higher highs and higher lows on both the 4H and daily charts. On the daily timeframe, the 14-day RSI is hovering just below 70, indicating strong demand for the EUR against the USD, while also highlighting the risk of short-term overbought conditions around the 1.18 handle. Despite a firmer US Q3 GDP print at 4.3% versus 3.3% expected, the USD recovery has been shallow, leaving the underlying trend tilted in favor of the Euro while the dollar remains on the back foot.
The ECB remains steadfast in holding the policy rate at 2.0%, a position it has sustained since June. Revised forecasts indicate a modest increase in growth and inflation expectations, alleviating the need for additional easing and providing support for the EUR. Markets currently expect that the ECB will probably maintain rates at their current level until mid-2026, thereby establishing a consistent yield floor for the Euro. President Christine Lagarde’s measured approach recognizes the prevailing uncertainty while refraining from any promises of new reductions. The current restraint is seen as a signal that the easing cycle is approaching its end, which bolsters EUR/USD on pullbacks as investors prepare for a relatively stable EUR compared to a USD that is already deep into an easing phase. The Federal Reserve has already implemented 75 bps of cuts earlier in 2025 and followed with an additional 25 bps in December, resulting in the federal funds range being approximately 3.50%–3.75%. Official guidance via the dot plot indicates just one more cut in 2026, yet futures markets are at odds, pricing in two or more additional cuts within the next year. Fed officials are divided: some, including regional presidents, believe that policy can take a break to evaluate the effects of previous actions; others caution that maintaining restrictive measures for an extended period might lead to potential risks down the line. The result is a US Dollar Index drifting lower within a pronounced descending channel, recently testing the 97.70–98.10 zone. For EUR/USD, that backdrop turns every short-term dollar bounce into a selling opportunity, reinforcing Euro strength as long as the Fed path remains more dovish than the ECB path.
EUR/USD is currently positioned within an ascending channel on the 4H chart, with price movements fluctuating between rising support around 1.1720 and resistance slightly above 1.1800. Immediate resistance is concentrated in the 1.1800–1.1804 range, where a psychological barrier coincides with the recent two-month high from December 16. A consistent daily close above that zone would pave the way toward the upper boundary of the channel around 1.1870, followed by a significant resistance level at 1.1918, the highest point since June 2021. On the downside, the first key support is the 9-day EMA around 1.1730–1.1731, with the channel floor just below at 1.1720. Deeper support is positioned at the 50-day EMA around 1.1650–1.1653, followed by the 1.1589 low from December 1, which would significantly test the current bullish structure if breached. As long as the pair holds above 1.1730, the technical profile remains clearly positive. Momentum indicators indicate a positive trend but caution against becoming too relaxed. On the 4H chart, EUR/USD trades with the RSI near 60, indicating robust upward momentum without reaching extreme levels, while the daily RSI is closer to 69, right at the threshold of overbought conditions. The price is consistently positioned above the 9-day EMA and the 50-day EMA, with the shorter average outpacing the longer one, and both are trending upward. This configuration indicates a robust trend instead of a mere random spike. However, the closeness of RSI to the overbought threshold indicates that a sudden intraday rejection from 1.1800–1.1810 is a possibility, particularly in the context of thin year-end liquidity. Temporary pullbacks toward 1.1730–1.1700 would indicate a healthy trend rather than a peak, provided the pair does not close decisively below the 1.1650 region on a daily basis.
The intraday FX performance map indicates that the EUR is among the stronger currencies against the USD, with the Euro appreciating approximately 0.19% relative to the dollar. The dollar is weaker across much of the G10 complex, while fluctuations among GBP, CHF, JPY, and commodity currencies show a more varied pattern against one another. The profile indicates that the current movement is not just a general risk-on softness in the USD, but rather a specific narrative of divergence in rates and policy between the Eurozone and the United States. With EUR/USD trading near 1.1770–1.1780 and the DXY sliding below 98, capital is rotating away from the dollar toward currencies backed by stable or less-dovish central banks. The EUR fits that profile as long as the ECB maintains its stance at 2.0% and avoids indicating a renewed easing cycle.