EUR/USD is currently positioned around 1.1690–1.1700, undergoing a measured correction from the peak observed in late December at 1.1808. The price is positioned above the ascending 50-day EMA at 1.1684, yet remains below the 9-day EMA around 1.1724. This indicates a period of consolidation following the decline, rather than a definitive trend reversal. On the daily chart, the 14-day RSI is approximately 47, indicating a decline in upside momentum and suggesting a neutral-to-soft bias rather than a robust bullish configuration. The market is currently consolidating below 1.1700 after not being able to sustain the breakout above 1.1755 and 1.1808. Sellers are gradually reasserting their influence, yet neither side has shown signs of capitulation. The macroeconomic data for the Euro does not support a strong bullish stance on EUR/USD. The Eurozone’s headline HICP experienced a deceleration to 2.0% year-on-year in December, down from 2.1%, aligning perfectly with forecasts. Meanwhile, core HICP fell to 2.3% from 2.4%, surpassing the consensus estimate of 2.4% on the downside. The combination indicates a softer underlying inflation trend, maintaining pressure on the European Central Bank to adopt a dovish stance through 2026, which inherently limits sustained movements above 1.18.
Germany introduces an additional dimension of vulnerability. Retail sales decreased by 0.6% month-on-month in November, following a 0.3% drop in October, contrary to expectations of a 0.2% rise, indicating ongoing challenges for consumers. Sales increased by 1.1% year-on-year following a 0.9% rise; however, the consecutive monthly declines are more significant for immediate growth prospects. In December, German HICP decreased to 2.0% year-on-year from 2.6%, falling short of the 2.2% market expectation and underscoring the trend of decelerating inflation. Services activity is showing signs of a slowdown. The Eurozone S&P Services PMI for December has been adjusted downward to 52.4, a decrease from the previous figure of 52.6 and a decline from November’s 53.6. The index continues to hold above 50, indicating that the sector is in a state of expansion; however, the trajectory appears to be downward. In summary, the combination of softer inflation, weak German consumption, and a downward-revised services PMI suggests that the potential for EUR appreciation is likely to be constrained, unless there is a significant bearish development on the USD front.
The Dollar Index is currently positioned at approximately 98.6, operating within a short-term ascending channel. Immediate supports are positioned around 98.50 and 98.15, while resistance levels are approximately at 98.85 and 99.07. The price movement within this range indicates consolidation rather than a breakdown, suggesting that the dollar maintains a slight underlying demand. The communication from the Fed presents a mixed picture, which serves to limit the dollar’s upward movement while still providing some support. One policymaker advocates for more substantial rate cuts in 2026 to safeguard growth, while another cautions that unemployment may increase if the economy decelerates excessively. Meanwhile, a third emphasizes the necessity for a stringent data-driven approach concerning both inflation and employment. Additionally, the markets are aware that President Trump will appoint a new Fed chair, introducing further uncertainty regarding the future direction of policy. Fed funds futures currently indicate a probability of approximately 82–83% that rates will remain unchanged at the mid-January meeting. While this suggests no immediate shock, there is considerable optionality to consider beyond that date. The macro calendar is currently the primary focus of the USD narrative. ADP Employment Change is anticipated to be +47,000 following a previous decline of −32,000. JOLTS job openings are expected to decrease slightly to 7.6 million from 7.67 million. The ISM Services PMI is projected at 52.3, compared to 52.6, while Nonfarm Payrolls are forecasted to be approximately +55,000. Stronger-than-anticipated figures would elevate yields and the dollar, whereas a disappointing set would bolster the argument for a weaker USD and a rebound in EUR/USD. Current geopolitical tensions, particularly the U.S.–Venezuela situation, are failing to offer significant safe-haven support for the dollar at this moment; the price action indicates that expectations from the Fed and concrete data continue to be the primary influences.
Intraday, EUR/USD is positioned around 1.1685–1.1700 and has consistently responded to a rising trendline that has steered the pair upward since early December. Dips toward 1.1660 have drawn in buyers, indicating that substantial capital is safeguarding that range in anticipation of the critical 1.1650 support level. The overall framework continues to indicate higher lows since early December; however, the failure to maintain levels above 1.1755 and the subsequent setback at 1.1808 have transformed the recent movement into a discernible corrective phase. The initial support level is currently positioned between 1.1660 and 1.1650, with subsequent support found at the lows from December 8–9, approximately 1.1615, and further down at the early-December base. On the topside, resistance begins with the 9-day EMA at 1.1724. A robust supply zone is established between 1.1705 and 1.1755, coinciding with the descending trendline from the December peak and a recent swing high. The significant thresholds ahead are 1.1808, marking the three-month peak, and 1.1918, representing the highest level since June 2021. While EUR/USD remains under the 1.1755–1.1808 threshold, this range should be regarded as a selling zone instead of the onset of a new bullish trend. On the 4-hour chart, the MACD histogram fluctuates near the zero line, indicating a deficiency in robust directional momentum, while the RSI hovers around 40–45, suggesting a slight bearish inclination without reaching oversold levels. This scenario aligns with the current price dynamics: a managed decline from 1.1808, halted below 1.1700 yet still susceptible to a breach of 1.1660 should the data favor the dollar. Cross-section currency data indicate that the EUR is neither in a collapse phase nor taking the lead in the market. In a recent observation, the Euro appreciates approximately 0.11% against the USD and around 0.13% against the CAD, while remaining nearly unchanged against the GBP. In another, it remains essentially unchanged against the dollar at approximately −0.01% and shows a slight strengthening against the pound. Movements of 0.1–0.2% among major currencies indicate a period of notably low foreign exchange volatility as market participants anticipate the upcoming U.S. employment data.
For EUR/USD, this indicates that the pair is not being overwhelmed by a surging dollar; it is gradually moving due to weak Eurozone data, and the market is hesitant to completely factor in significant Fed cuts without further validation. Until one side breaks — either a clear euro surprise or a decisive dollar miss — the most logical expectation is that EUR/USD continues to fluctuate within the 1.1650–1.1755 range rather than establishing a definitive trend. If ADP and JOLTS exceed expectations — for instance, ADP significantly above +47,000 and job openings remaining near or above 7.6 million — the market will likely lower the chances of an early, aggressive easing cycle from the Fed. In that scenario, the Dollar Index appears poised to explore the range of 98.85–99.07, while EUR/USD is likely to dip beneath the 50-day EMA at 1.1684, potentially testing 1.1660 on a closing basis and paving the way toward 1.1615. A daily close below 1.1650 would indicate that the pullback from 1.1808 has transitioned into a more significant downturn. Should the U.S. data set align with expectations — ADP approximately +47,000, JOLTS near 7.6 million, ISM Services PMI remaining above 52, and NFP around +55,000 — market positioning is likely to remain stable. Consequently, EUR/USD is expected to oscillate within the 1.1660–1.1684 support range and the 1.1724–1.1755 resistance area, with any intraday fluctuations likely to reverse swiftly. Should the figures underperform notably — for example, if ADP remains near zero or turns negative, JOLTS declines more steeply, ISM Services approaches 51, and NFP falls short of the 55,000 threshold — the markets would adjust to anticipate a more pronounced easing trajectory from the Fed in 2026. In that scenario, DXY might retreat to 98.15, allowing EUR/USD the opportunity to recover to 1.1724, re-evaluate 1.1755, and possibly confront 1.1808 once more. A daily close above 1.1755 would reopen the path to 1.1808 and subsequently 1.1918, provided that Euro data remains stable and does not worsen further. From a tactical viewpoint at 1.1690–1.1700, EUR/USD presents a less appealing opportunity for a long position.
The pair is currently positioned beneath short-term resistance levels at 1.1724 and 1.1755, indicating a broader corrective move from 1.1808. Eurozone macroeconomic indicators are notably weak, with HICP reported at 2.0%, core inflation at 2.3%, German retail sales declining by −0.6% month-on-month, and the services PMI adjusted down to 52.4. Meanwhile, the dollar remains in a stable consolidation phase around DXY 98.6, as we approach a significant U.S. data calendar. Downside levels at 1.1660, 1.1650, and 1.1615 are clear and attainable with a positive surprise from the U.S. side. Conversely, upside movement necessitates a weaker-than-anticipated data cluster and a shift in Fed expectations to surpass 1.1755 and 1.1808. Considering this balance, the more strategic approach is to view EUR/USD as a Sell on strength rather than a Buy. A prudent approach involves selling rallies within the 1.1705–1.1755 range, aiming for a medium-term target zone of 1.1650–1.1615. A definitive invalidation point is established if the pair closes above 1.1808, while maintaining attention on data-driven catalysts related to U.S. employment and services reports.