The recent US intervention in Venezuela and the apprehension of Nicolás Maduro have led to a significant increase in traditional hedges, while overall market risk remains unchanged. Gold is currently priced between $4,413 and $4,421 per ounce, having briefly reached a peak of approximately $4,549.71 on December 26. Silver is currently priced near $75.5, reflecting an increase of approximately 3.6–3.9%. Defense stocks in Europe and the US have experienced an increase of approximately 4–8%, while energy companies such as Chevron have seen a rise of around 4%, with pre-market spikes exceeding 7%. Brent crude has experienced a slight increase, rising just over 1% to approximately $61.50 a barrel. This movement is constrained by Venezuela’s production, which accounts for about 1% of global output, alongside sufficient supply that limits further price escalation. Currently, US indices are showing strength: the Dow is near 49,032, the S&P 500 is close to 6,908, the Nasdaq is around 23,438, and the VIX is at approximately 14.8. The composition is crucial for EUR/USD: geopolitical risk is being mitigated through gold and defense, rather than through widespread equity liquidation, which constrains the dollar’s upside to tactical spikes instead of a fundamental shift. On the dollar side, the price is reacting to both political factors and macroeconomic conditions. The Dollar Index is currently positioned at approximately 98.2, reflecting a slight intraday increase of about 0.07%. The recent support for the dollar was influenced by developments in Venezuela and the usual “risk-off” response, yet the fundamental factor continues to be the trajectory of US interest rates.
ISM Manufacturing reported at 47.9, falling short of the previous 48.2 and expectations around 48.3, remaining solidly in contraction territory. Recent CPI and NFP figures have shown weaker results, leading futures to price in approximately 50–63 basis points of Federal Reserve cuts by 2026. The prevailing expectation is for two cuts, with March identified as the earliest feasible timeframe should the incoming data fall short of consensus estimates. Despite that, Fed officials are indicating a measured approach; remarks that further easing “could be some way off” if growth remains steady have kept yields from plummeting. The 10-year yield hovers between 4.17% and 4.18%, providing sufficient support for the dollar during periods of market stress, yet it remains low enough that EUR/USD is no longer benefiting from a one-sided rate advantage for the US. The European Central Bank has halted its forward guidance and has completely transitioned to a stance that relies on data. The prevailing deposit rate is maintained with the assertion that policy is “appropriate,” and there is no prior commitment to easing. Officials emphasize that forthcoming actions may take either path. The markets view this as a subtle yet definitive reduction of near-term easing risk, which had previously limited EUR/USD rallies throughout 2024. The euro currently operates as a currency with a central bank expected to remain inactive for a significant portion of 2026, while the Fed makes minor adjustments. The key macroeconomic factor to watch is Eurozone inflation: as long as the Consumer Price Index remains below approximately 2.5%, the market can accommodate the ECB maintaining its current stance; however, a consistent rise above that threshold would necessitate the pricing in of possible rate hikes and elevate the euro’s rate floor. The rate differential that previously drove the pair lower is now narrowing: approximately two Fed cuts are priced in, while the ECB is seen as remaining relatively unchanged. The compression of spreads serves as the foundation for the medium-term outlook in EUR/USD, despite short-term movements currently leaning towards the dollar. The movement in price illustrates this ongoing struggle.
The EUR/USD pair has faced multiple rejections around the 1.1800–1.1850 range, a resistance zone that has constrained upward movement for several weeks. On the downside, buyers have shown resilience at the 1.1670 level, aligning with a significant demand zone identified by various analysts and a 38.2% retracement from the recent upward movement observed in shorter timeframes. Simultaneously, additional snapshots indicate that the pair is trading below 1.1700 following US data, reinforcing the notion that the market is utilizing the 1.17 level as a pivot point. The setup is straightforward: 1.1670–1.1635 represents the initial significant support zone; 1.1800–1.1850 serves as the resistance level that must be surpassed to allow for a move to the upside. On the 4-hour chart, EUR/USD has recently breached an upward trendline, facilitating a more pronounced pullback into the 1.1670 zone. This level serves as more than mere horizontal support; it coincides with the 38.2% Fibonacci retracement of the most recent swing, creating a confluence area where buyers can establish risk just beneath support while targeting a re-test of the 1.19 handle. Sellers are concentrating on two strategic indicators: intraday breakdowns at a minor descending trendline near 1.1730, and a definitive move below 1.1670 that would pave the way for further movement toward the 1.14 area. In the 1-hour perspective, the price frequently hovers close to the lower limit of its average daily range, which statistically diminishes the likelihood of an additional breakdown within the same session and leans towards consolidation or a corrective rebound toward the 1.1730 intraday trendline. Currently, EUR/USD is fluctuating between the support level of 1.1670, intraday supply near 1.1730, and the more significant resistance range of 1.1800–1.1850.
The daily outlook continues to show positive signs. The EUR/USD pair is positioned well above its ascending 100-day EMA around 1.1635, which has consistently served as a supportive level during each corrective move since mid-November. Provided that daily closes remain above that line, the trend structure continues to exhibit bullish characteristics. The daily RSI is positioned around 59–60, which suggests a strong trend without indicating any signs of exhaustion. Currently, there is no evident bearish divergence; momentum is aligning with price movements instead of diminishing, unlike in Q3 when unsuccessful rallies were paired with a declining RSI. Bollinger Bands are exhibiting a contraction, with the mid-band positioned at approximately 1.1738 and the upper band hovering around 1.1820, as spot trades are occurring near the center of this range. This exemplifies classic volatility compression following an upward movement, usually foreshadowing a significant directional shift. A daily close above approximately 1.1820 would signify a volatility break that has historically resulted in follow-through of about 120–180 pips in EUR/USD. The weekly map illustrates the reasons behind the prevailing heaviness in the current area. The 1.1747–1.1775 range is characterized by three intersecting elements: it contains the high-week close from 2025, aligns with the 61.8% retracement of the September decline, and corresponds with the upper limit of the medium-term upward movement from the 2025 lows. It is uncommon for markets to change direction from this type of confluence without initially breaching significant support levels. The support level is established near 1.1500, reinforced by historical peaks from March 2020 and 2022, as well as a more significant retracement from the upward movement in July. Provided that weekly closes remain above 1.1500, the present activity is most accurately characterized as consolidation within an uptrend, rather than indicating a topping formation.
A clear weekly rejection from this range would necessitate a consistent move below 1.1500 and continuation into the subsequent demand levels; anything less than that indicates a temporary pause within a bullish trend. On the monthly chart, EUR/USD has already shown a movement exceeding 17% from the yearly lows, advancing into a multi-year resistance corridor ranging from 1.1917 to 1.2020. The selection of that band is not random. This corresponds with the complete extension of the 2022 advance, the 38.2% retracement of the 2008 secular decline, and the upper parallel of a pitchfork anchored in 2022. The price remains below this belt, showing signs of consolidation just underneath. Monthly momentum is exhibiting its strongest levels since 2021, a timeframe that has typically indicated exhaustion only following a parabolic blow-off, rather than the current pattern of a measured advance and consolidation. A consistent monthly close above 1.2020 would signify a significant development, paving the way toward key reference points including 1.2218 (a notable high-week close from 2021), the range of 1.2350–1.2414 (highs from 2018 to 2021), and eventually reaching the 1.2990 region associated with a 1.618 extension of the 2022 movement. Those are not immediate targets; they are medium- to long-term milestones that only gain significance if the market recognizes 1.2020 as support instead of resistance.