The EUR/USD pair is currently positioned between 1.1790 and 1.1800, having recently reached a three-month peak at 1.1808. The action occurs in light of a robust 4.3% annualized US GDP figure for Q3, an increase from approximately 3.8%, which typically would have bolstered the USD under standard conditions. The recent uptick in the dollar proved to be temporary, as market participants shifted their attention to the underlying factors of growth and the trajectory of policy, rather than solely the headline figure. A significant portion of the expansion is linked to areas such as healthcare and inventory adjustments, rather than a widespread resurgence in private investment or productivity. Consequently, the data did not succeed in reversing the medium-term bearish trend in the dollar. Futures markets indicate expectations for at least two Federal Reserve rate cuts in 2026, despite a GDP growth of 4.3%. This outlook is driven by cooling inflation and a marginal decline in labor market momentum. Recent weekly data and confidence indicators suggest a deceleration in hiring and a decline in consumer sentiment as we approach year-end, which limits real yields and maintains downward pressure on the USD.
The US Dollar Index is currently positioned at approximately 97.9, moving within a distinct descending channel. The upper boundary is defined by the 50-EMA close to 98.5 and the 100-EMA situated around 99.1. Key support levels are identified at 97.75, 97.35, and 97.00. The current structure is sufficiently fragile to allow EUR/USD to maintain a bid towards the 1.18–1.19 range, provided that the narrative surrounding Fed cuts continues to hold. Comments from US President Donald Trump suggesting that a future Fed chair ought to consider lowering rates even in the face of solid growth introduce political noise surrounding the central bank’s independence. The prevailing uncertainty strengthens the bearish outlook for the USD heading into 2026, particularly during a week when market liquidity is reduced due to the Christmas holidays. In a market characterized by reduced participation and thinner order books, upward movements in EUR/USD beyond 1.18 may accelerate rapidly; however, retracements can occur just as swiftly.
On the daily chart, EUR/USD is progressing within an upward channel that began in late November. The price remains positioned above the nine-day EMA at approximately 1.1745 and the 50-day EMA around 1.1660, with the shorter average currently trading above the longer one. The current configuration indicates a positive trend, implying that any declines towards 1.1750–1.1740 are viewed as opportunities for purchase rather than signals of a reversal. On the 4-hour chart, the pair finds support above the 50-EMA near 1.1750 and the 100-EMA around 1.1670, which reinforces this bullish short-term structure. The daily momentum for EUR/USD appears to be extended, with the 14-day RSI positioned near 71, indicating it is in overbought territory. This generally supports the case for consolidation or a minor correction prior to the trend continuing.
Simultaneously, intraday metrics appear more subdued, as the RSI on shorter time frames remains in the range of 58–60, suggesting consistent buying interest without reaching an extreme peak. The combination typically indicates sideways or slightly corrective trading within the range of approximately 1.1740 to 1.1810, rather than suggesting an immediate reversal toward 1.16. The nearest resistance level on the upside is the psychological 1.1800 mark, along with the recent three-month peak at 1.1808. A definitive daily close above 1.1808 would pave the way to 1.1850 on intraday charts, followed by the upper boundary of the ascending channel around 1.1880. Beyond that, the subsequent historical reference is 1.1918, marking the peak since June 2021. The range of 1.1880–1.1918 is expected to see an increase in profit-taking activity, as it represents both the upper boundary of the channel and a significant previous high. On the downside, EUR/USD has a primary support cluster around 1.1760–1.1745, with deeper levels at 1.1727, 1.1660, and potentially 1.1589 if correction pressure intensifies. The essence of the EUR/USD narrative revolves around real rates and comparative policy rather than growth, with expectations of Fed easing and relatively restrained ECB policy narrowing rate differentials in favor of the euro, allowing the pair to trade near 1.18 despite strong US macroeconomic data.