EUR/USD is currently trading within a narrow range around the mid-1.17s, oscillating between approximately $1.1720 and $1.1760, with consistent difficulties in maintaining any momentum close to $1.1800. Quotes from various sources indicate that the pair is trading between $1.1752 and $1.1755, with intraday lows slightly above $1.1720 and previous fluctuations below $1.1735 and $1.1732, reinforcing that 1.17 serves as the current pivot point. Short-term order flow indicates that bids are accumulating around $1.1720, while offers are positioned in the $1.1760–$1.1800 area. This scenario establishes EUR/USD as a range trade, with $1.1720–$1.1700 serving as the primary support level, and $1.1800 limiting any upward movements. The wider operational range is approximately $1.1660–$1.1845, yet the main contention today lies within the $1.1720–$1.1800 zone. On the higher time frames, EUR/USD continues to operate on the bullish side of its essential trend indicators. The level around $1.1750 is positioned closely to the 20-day moving average, currently at approximately $1.1753, which has stabilized without showing signs of decline. The 50-day moving average at $1.1667 and the 200-day near $1.1660 create a robust support level just beneath the current price.
A rising 100-day EMA around $1.1635 establishes another medium-term support level, indicating that the upward movement from previous lows remains valid as long as the pair stays above $1.1635–$1.1660. Bollinger Bands support this perspective: the mid-band is positioned near $1.1738, the upper band is approximately $1.1820, and the lower band is near $1.1655. The EUR/USD is currently positioned slightly above the middle band, and with the bands narrowing, it indicates that the December rebound is in a phase of consolidation rather than experiencing a collapse. The Ichimoku Kijun line around $1.1713 reinforces the notion that retracements into the $1.1713–$1.1738 range are viewed as corrections within an ongoing uptrend, rather than the initiation of a bearish phase, unless the price firmly breaches the $1.1713–$1.1660 cluster. The momentum and trend indicators for EUR/USD show a positive inclination, though they have moved past the euphoric stage. On the daily chart, the RSI is positioned in the high 50s, specifically between 55 and 60, indicating a comfortable stance above the neutral 50 line and significantly away from overbought conditions. The daily MACD indicates a buy signal, while the ADX reflects a robust, yet not excessive, trend strength. This reinforces the notion that the medium-term momentum continues to support euro strength relative to the dollar. Shorter-horizon oscillators suggest a more cautious approach: The Stochastic RSI indicates oversold conditions, while the Commodity Channel Index hovers around zero, signaling that recent selling pressure has eased the intraday upside without disrupting the overall structure. The conclusion is clear: momentum remains positive as long as EUR/USD holds above the 1.1660–1.1635 range, but there is noticeable intraday fatigue around $1.1760–$1.1800, which limits the pair’s upward movement until new drivers emerge. The price structure surrounding EUR/USD is distinctly defined. On the topside, 1.1800 is the primary barrier. Each approach into $1.1760–$1.1800 has resulted in small-bodied candles with consistent upper wicks, indicating ongoing selling pressure rather than a clear breakout momentum. The pair has also fallen beneath a rising 4-hour trendline, altering the very short-term sentiment from trending to sideways. On the downside, the 38.2% Fibonacci retracement of the last leg higher is positioned just below $1.1700 and now serves as the initial line of defense.
A sustained break through $1.1700 would reveal the 50% retracement around $1.1660, aligning with prior consolidation, the 50-day moving average near $1.1667, and the 200-day close to $1.1660. The lower Bollinger Band near $1.1655 and previous mentions of $1.1665 as a potential downside risk zone all align within that same range. On the topside, the upper Bollinger Band and immediate resistance cluster around $1.1820, while one volatility map indicates a typical five-day range of $1.1720–$1.1845. An upside break above $1.1800 would open the path toward $1.1845. Currently, EUR/USD presents a buy-the-dip opportunity within the range of $1.1720–$1.1700, with a significant structural support level established at $1.1660. On the euro side of EUR/USD, the stability of policy is bolstering the currency, even in the face of lackluster growth data. The European Central Bank maintained rates at its December meeting and indicated a strictly data-driven, meeting-by-meeting strategy. Market participants widely anticipate that the ECB will maintain its key rate around 2.15% for a significant portion of 2026, barring a substantial decline in euro-area growth.
The decision to refrain from pre-committing to cuts, along with a persistently restrictive real rate environment, offers a slight yield cushion for the euro. Nevertheless, the macroeconomic environment is not straightforward. The German Manufacturing PMI remains at a low 47.7, indicating a persistent contraction in the sector. Industrial output in the euro area continues to face challenges, and concerns about growth linger, leading to a tendency to overlook strong data rather than pursue it actively. Investors exhibit a preference for acquiring euros during dips when EUR/USD approaches $1.17 or $1.1660. However, there is a reluctance to adjust the pair significantly higher amidst challenges faced by the real economy. The dollar component of EUR/USD is experiencing downward pressure due to policy expectations, yet it finds support in its role as a safe haven. The Federal Reserve has already reduced rates to a range of 3.50%–3.75% following a total easing of 75 basis points in 2025, and the curve currently anticipates approximately two additional cuts in 2026. The proposed course of action would reduce the disparity between yields in the US and the euro area, diminishing the carry advantage of the dollar and, in the long run, supporting a stronger EUR/USD exchange rate. Fed futures currently indicate approximately an 85% likelihood that the Fed will maintain rates at the January meeting, with a roughly 15% probability of a subsequent 25-basis-point cut, suggesting a pause in the immediate future without a shift towards a hawkish stance.
The US Dollar Index is currently stabilizing in the high-90s range, approximately between 98.20 and 98.30, as it moves within an ascending short-term channel. Support is positioned at approximately 97.75, while resistance is noted between 98.50 and 99.00, defining the dollar’s trading range. As long as DXY remains significantly below the 99.00–99.35 range, any upward movement in the index is likely to be met with selling pressure. This dynamic structurally favors EUR/USD over the medium term, even though intraday fluctuations may occasionally benefit the greenback. An important factor influencing the dollar, and consequently EUR/USD, is the impending transition in leadership at the Federal Reserve. As Jerome Powell’s term approaches its conclusion in May, the US administration has indicated its intention to appoint a new chair. The market expectation indicates a more dovish stance: a chair prepared to maintain lower rates for an extended period, accept more accommodative financial conditions, and align more closely with the administration’s preference for inexpensive funding. The political dynamics introduce concerns regarding the autonomy of the Federal Reserve and contribute to an uneven downside risk for the dollar. For EUR/USD, this indicates that any prolonged phase of stability in global risk sentiment, coupled with weak US data and dovish Fed commentary, would probably drive the pair upward, surpassing $1.1800 and approaching the upper levels of the recent range. In addition to central banks, EUR/USD serves as an indicator of comparative growth and the overall appetite for global risk. The euro is currently facing challenges due to stagnant industrial activity and inconsistent demand, whereas the US continues to demonstrate stronger growth and remains a magnet for capital flows in times of stress.
The ongoing tensions in Eastern Europe, the persistent Russia–Ukraine conflict, and distinct frictions between the US and Venezuela continue to support the dollar as a safe asset. In a scenario where risk sentiment deteriorates, the EUR/USD pair may be driven down to levels around $1.1720, $1.1700, and possibly $1.1660, as market participants seek safety in the dollar. As volatility decreases and market attention shifts to rate spreads and future policy, the euro strengthens, and the pair moves back toward the range of $1.1760–$1.1800. This dynamic is the reason the pair is oscillating instead of trending: euro weakness stemming from growth concerns restrains rallies, while dollar weakness due to the easing cycle and political risk curtails downside momentum. Integrating the technical and macro perspectives, EUR/USD finds itself in a pivotal equilibrium zone. Above, $1.1760–$1.1800 represents a supply band that has consistently rejected price movements, while $1.1820 and $1.1845 indicate the subsequent resistance levels should that ceiling be breached. Below, 1.1720 is the first line, 1.1713 the Kijun reference, 1.1700 the key Fibonacci pivot, and 1.1660–1.1655 the core support pocket where the 50-day, 200-day and lower Bollinger Band converge. Provided the pair maintains its position above $1.1660 and sustains the 100-day EMA near $1.1635, the medium-term outlook continues to be bullish rather than neutral. For positioning, a constructive stance is favored over an outright bearish one: dips into $1.1720–$1.1700 and even $1.1680–$1.1660 present more attractive opportunities for accumulation rather than aggressive shorting, especially with the Fed projected to cut again in 2026 and the ECB remaining on hold. Given the prevailing circumstances, EUR/USD is best categorized as a prudent Buy/Hold with a bullish inclination, supported by the 1.1660 floor and limited by the 1.1800–1.1845 resistance zone until a significant macro catalyst disrupts this range.