The EUR/USD pair has retraced over 1.6% from its December high near 1.1747–1.1775 and is currently experiencing a heavy trading range between 1.16 and 1.17. The pair has recorded nine declining sessions in the past eleven and experienced two successive negative weeks, indicating a significant correction rather than mere fluctuations from the late-year breakout. The December Non-Farm Payrolls report indicated the addition of 50,000 new jobs, falling short of the anticipated 60,000. However, the unemployment rate experienced a decline from 4.5% (revised from 4.6%) to 4.4%. The specific line item provided sufficient backing for the dollar, as it bolsters the narrative of a “still-tight” labor market and alleviates the urgency for the Federal Reserve to implement drastic cuts. The U.S. Dollar Index has surpassed the 98.85–99.00 resistance range, creating potential for movement toward 100.25–100.40. Meanwhile, U.S. 2-year yields are trading above approximately 3.5%, and 10-year yields are above 4.15%. In this context, EUR/USD is understandably under pressure, even with the euro area retail sales showing a modest improvement at +0.2% month-on-month compared to the +0.1% anticipated. The euro exhibits domestic support; however, the more robust momentum at this moment is originating from the U.S. sector.
On the weekly chart, EUR/USD advanced in December after successfully holding the early-month support level around 1.1589. Since the low in November, the pair has experienced a rally of nearly 3%, encountering resistance precisely at the 1.1747–1.1775 range. The range is characterized by the 2025 high-week close, the 61.8% retracement of the September decline, and the 2025 high daily close. The price subsequently encountered a period of approximately four weeks where it struggled to surpass this resistance, establishing it as a definitive distribution zone. The recent downturn has pulled spot closer to the initial weekly support level at 1.1598, marking the 61.8% retracement of the November rally, coinciding with a significant internal trendline (“75% parallel”) that is expected to converge in the coming weeks. Provided that EUR/USD maintains a weekly closing above 1.1598, the movement can still be regarded as a typical pullback within a larger upward trend. A clean weekly close below 1.1598 would validate that a more substantial high has been established at 1.1747–1.1775, thereby reframing this movement as the initiation of a wider downtrend. If EUR/USD falls below 1.1598, the subsequent technical focus shifts to the 1.1497–1.1505 range, which combines the 78.6% retracement of the July rally with the highs from March 2020 and March 2022. A breach of that level reveals 1.1394, the April high close, which serves as the ultimate boundary distinguishing a managed retracement from a complete reset of the 2025 upward trend. Beneath 1.1394 lies a more significant structural pivot at 1.1254–1.1276, which integrates the 38.2% retracement of the 2025 range alongside the 2023 swing high. If the price trades and maintains below that zone, the ongoing bullish phase in EUR/USD is effectively nullified, leading the market back to a wide, fluctuating range with a stronger bearish inclination. To put it differently, 1.1598 serves as the initial decision point, while the range of 1.1497–1.1505 indicates confirmation of a more pronounced correction. Additionally, 1.1394 along with 1.1254–1.1276 marks the levels where medium-term positioning shifts to a defensive stance for euro bulls.
The upper boundary of the structure is clearly delineated. The initial resistance level is the previous floor near 1.1690–1.1700, where several bullish consolidations took place in December. Following the breakdown, that range has now become a supply zone where those holding long positions will likely seek to exit on any recovery. Above that, the 1.1747–1.1775 range serves as the main resistance; a definitive weekly close above 1.1775 would confirm the resumption of an uptrend. If EUR/USD manages to reclaim that zone, the subsequent upside targets include the 2025 swing high and the 100% extension of the 2022 advance at 1.1917–1.1919, followed by the 38.2% retracement of the entire 2008 decline at 1.2020. The 1.2020 zone represents a significant macro level; should it be attained, it is likely to draw in new medium-term sellers. Further up, the 2017 swing high near 1.2092 becomes the next resistance, where euro strength would again face scrutiny. Currently, with the spot price significantly below 1.1747 and fluctuating between 1.16 and 1.17, these higher levels serve as benchmarks for a situation that has yet to be realized.
On the 4-hour and daily timeframes, EUR/USD exhibits a robust support cluster in the 1.1615–1.1630 range. Intraday breaches of that range have thus far shown insufficient follow-through, yet a consistent decline beneath would pull the pair directly towards the weekly pivot at 1.1598. Following that, 1.1500–1.1515 emerges as the subsequent tactical target, where short-term traders will monitor for potential bottom-fishing attempts. The broader dollar complex indicates mounting pressure on the euro. USD/CAD is steadily approaching the 1.3890–1.3905 resistance zone following an increase in Canada’s unemployment rate from 6.5% to 6.8%, which bolsters the dollar’s strength against commodity currencies. The USD/JPY is approaching the 158.00 level as U.S. yields rise, with 2-year and 10-year Treasuries exceeding 3.5% and 4.15%, respectively, bolstering carry demand for the dollar. The U.S. Dollar Index remains above 98.85–99.00 and is testing levels around 100.25–100.40, indicating a general strength in the USD rather than a narrative focused solely on the euro. In this context, rallies in EUR/USD are being met with selling pressure, while dips have not yet seen strong support.