EUR/USD Price Forecast - EUR to Dollar Steadies Near 1.1870 as Soft US CPI Keeps Fed Cut Hopes Alive

EUR/USD – soft CPI, resilient dollar and a compressed 1.18–1.20 range

Spot structure: EUR/USD pinned between 1.1785 support and 1.1990 resistance

EUR/USD is trading around 1.186–1.187 after four sessions of tight range trade, trapped roughly between 1.1785 and 1.1930. Price is still riding an upward-sloping structure: it holds above the nine-day EMA near 1.1860 and the 50-day EMA around 1.1765–1.1766, with the short EMA running above the longer one. That combination keeps the tone constructive as long as spot stays above the 1.1830–1.1840 demand band that has absorbed every dip this week. On intraday charts, the 4H 200-period moving average near 1.1765 reinforces the broader floor in the high-1.17s, while repeated failures above 1.1925–1.1930 cap the top of the recent consolidation.

US CPI, labour data and the USD side of the equation

The latest US CPI print is the main reason EUR/USD bounced from intraday lows. January headline inflation rose 0.2% month-on-month and 2.4% year-on-year, undercutting expectations of 0.3% and 2.5%. Core CPI printed 0.3% MoM and about 2.5% YoY, slightly softer than 2.6% previously but still not collapsing. The immediate market reaction was a drop in US yields and a pullback in the US Dollar Index from the 97.1 area toward roughly 96.9, taking some pressure off the pair after earlier dollar strength. At the same time, the labour side remains firm: Nonfarm Payrolls added around 130,000 jobs in January, almost twice typical forecasts, weekly jobless claims dipped to about 227,000 and continuing claims rose to roughly 1.86 million. That mix – softer inflation but solid employment – has the market pricing around 60–61 bps of Fed cuts for 2026, with the March meeting now seen almost certainly on hold and the first 25-bp cut pushed into the June–July window.

Eurozone growth, EUR performance and ECB policy stance

On the European side the macro backdrop has stabilised rather than surged. Eurozone GDP grew 0.3% quarter-on-quarter in Q4 and about 1.4% year-on-year, slightly above the 1.3% forecast, while employment rose 0.2%. The daily FX heat map shows EUR broadly steady against most majors but weaker against the New Zealand dollar and softer versus some high-beta currencies, while only modestly lower versus the USD. That pattern fits a currency backed by decent, not spectacular, data. Policy expectations are the bigger driver: the European Central Bank is widely expected to keep rates on hold through 2026, while the Fed is priced to cut two to three times once inflation allows more room. That evolving Fed–ECB divergence supports EUR/USD over the medium term. At the same time, ECB officials such as Martins Kazaks have started flagging that a “sizeable and pacey” euro appreciation could weigh on the inflation path, effectively creating a soft policy ceiling if the pair sprints too quickly toward or above the 1.20–1.21 zone.

Technical compression: EMAs, Bollinger Bands and momentum on EUR/USD

Technically EUR/USD is in a volatility contraction phase. Daily and 4H Bollinger Bands have narrowed, signalling reduced realised volatility. MACD on the 4H chart oscillates around the zero line, showing neither side has dominant momentum, and stochastic readings are hovering in neutral territory. Price sits near the mid-line of the recent Bollinger structure, with every dip toward 1.1830–1.1840 meeting buying interest and every push into 1.1925–1.1930 meeting offers. A rising trendline from mid-January now converges with horizontal resistance just under 1.19, forming a small wedge around 1.1860–1.1900. As long as the nine-day EMA at 1.1860 and the 50-day EMA at about 1.1765–1.1766 keep sloping higher, the technical bias stays gently bullish despite the short-term stalling.

Key EUR/USD levels: 1.1830 as line in the sand, 1.1990–1.2082 as upside band

On the downside, the first line to watch is the 1.1860 nine-day EMA and the intraday floor around 1.1840. A clean break and daily close below that zone would shift focus to the 1.1785–1.1795 area, where the lower edge of the recent range aligns with the 4H 200-period moving average. Below that, the 50-day EMA around 1.1765–1.1766 and the 1.1728–1.1767 pocket provide the next layer of support. Losing those opens room toward 1.1670 and then the 11-week low near 1.1578, where the medium-term bullish narrative would be seriously damaged. On the upside, bulls must first clear 1.1900–1.1929, which has repeatedly capped spikes and sits just under the recent swing high near 1.1990–1.1997. A daily close above 1.1930 would tilt the market toward the upper half of the range. If that break occurs while the dollar index is sliding back toward the 96.5 area or lower, EUR/USD can reach the 1.1990 handle and then the 1.2050–1.2082 resistance cluster that marks the highest levels since June 2021.

*Flows, trade plans and how markets are positioning around EUR/USD

Short-term strategies are already mapped around these pivots. Several intraday playbooks focus on buying dips above roughly 1.1860–1.1865, targeting 1.1920–1.1980 with stops parked just under 1.1825–1.1850. Opposing setups centre on selling a break of 1.1830, aiming for 1.1765 and below with protective stops back above the mid-1.18s. Repeated tests of the 1.1830–1.1840 band without a sustained breakdown show that buyers still defend that zone aggressively, while the failure to punch through 1.1925–1.1930 highlights profit-taking and fresh supply into strength. At the macro level, shifts in US CPI, labour data and Fed-cut probabilities will decide which side of that tactical battle wins: hotter-than-expected inflation or renewed equity stress would push USD higher and drag EUR/USD toward 1.1785 and 1.1765, while further disinflation and calmer risk sentiment would favour a grind toward 1.1990 and potentially 1.2050–1.2082.

Bias and stance on EUR/USD at current levels

Given the mix of softer US inflation, still-solid US employment, an ECB that is likely to stay on hold, and a Fed priced for more easing, the structure around 1.186–1.187 favours a moderately bullish stance on EUR/USD as long as 1.1830 holds on a closing basis. The pair trades inside a 1.1785–1.1990 corridor with a gently rising floor, backed by upward-sloping medium-term averages. In that context, the preferred approach is buy-on-dips rather than chasing breakouts: accumulation above 1.1830–1.1840 with eyes on 1.1990–1.2080 offers a cleaner risk–reward than selling into the current compression. Only a decisive break below 1.1765 that pulls price toward 1.1670 or even 1.1578 would flip this profile from a constructive, range-bound grind higher to a genuine downside reversal.

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