EUR/USD Price Forecast: Dollar Softens Near 97.8 DXY While the Pair Holds 1.18 Support

EUR/USD: Price Action, Macro Drivers and Trading Bias Around 1.1800

Macro backdrop shaping EUR/USD near 1.1800

EUR/USD is anchored around 1.1800 after dropping from the 1.2093–1.2095 highs seen in January. On the US side, February consumer confidence climbed to 91.2 from 89 and beat the 87 consensus, confirming that domestic demand remains solid even as trade uncertainty increases. Housing data point to cooling but not collapsing momentum: the monthly US house price index slowed to 1.8% from 2.1%, while the Case-Shiller index stayed at 1.4%. That points to a gradual deceleration rather than a sharp downturn.
In the euro area, the key focus is inflation. Markets expect German HICP for February to rebound by about 0.5% month-on-month after a 0.1% decline, keeping the annual rate close to 2.1%. Eurozone headline CPI is projected to ease from 2.0% to roughly 1.7%, with core inflation ticking down from 2.3% to about 2.2%. That profile is close enough to the ECB’s target to justify a patient stance on rates instead of rushing into aggressive cuts. The result is a currency pair where downside is cushioned by the absence of imminent ECB easing and upside is capped by a still-resilient US macro backdrop.

US policy, tariffs and USD tone behind EUR/USD support

The USD is being pulled in opposite directions by politics and monetary policy. After President Trump’s latest State of the Union speech, markets are dealing with renewed tariff risk: an already announced 10% global tariff, threats to move toward 15%, and open criticism of the Supreme Court after it ruled against elements of the tariff framework. The legal challenge introduces uncertainty about the durability of the trade agenda and builds a risk premium into the USD.
At the same time, the Fed minutes from January and subsequent comments show little appetite for cutting rates in March or April. Officials want clearer evidence that inflation is trending lower before considering easing. A higher-for-longer stance normally supports the dollar, but tariff noise and headline-driven volatility have capped dollar gains. That mix keeps EUR/USD from collapsing: the pair can test the mid-1.17s, but persistent policy uncertainty in Washington limits the ability of the greenback to break decisively higher.

DXY 97.6–98.4 band: the USD range that frames EUR/USD upside

The US Dollar Index is trading around 97.8 and oscillating inside a tight 97.6–98.4 corridor. Buyers defended the 97.33–97.46 shelf earlier and more recently 97.64, while rallies keep failing near 98.07–98.10. The 50-period moving average on short-term charts sits near 97.70 and is acting as dynamic support, with the 200-period moving average around 97.40 reinforcing this support cluster. RSI near 55 signals mild upside bias without overbought stress.
A sustained move through 98.07–98.10 would unlock 98.40–98.41 and likely pressure EUR/USD back toward 1.1740 and the 1.1670 zone. A failure to clear that ceiling and a break under 97.64 would signal that the dollar upswing is fading, giving EUR/USD scope to challenge 1.1835 and then 1.1890–1.1900. As long as DXY remains capped below 98.40, short-term risk in EUR/USD tilts gently toward the upside rather than toward an immediate breakdown.

Technical structure: EUR/USD boxed between 1.1740 and 1.1835

Price action in EUR/USD is consistent with consolidation rather than reversal. The pair has slid from the 1.2093–1.2095 area down to 1.1800 and is now hugging the 20-day and 50-day EMAs, both clustered around that level. On the daily chart, price remains inside a broader ascending channel even as a near-term descending triangle has formed off the recent highs.
Support layers are clearly defined. First, 1.1790–1.1785 marks the immediate intraday floor. Below that, 1.1748 is a Fib level that has capped and supported trading for roughly eight months. A break under 1.1742–1.1740 brings the late-January low near 1.1670 into view, and a deeper slide would target the lower boundary of the broader channel around 1.1600.
On the topside, 1.1820 is acting as short-term resistance, where the descending trendline from the 1.2040 peak converges with the 50- and 200-period moving averages on intraday charts. A daily close above 1.1835 would invalidate the descending triangle and open the path to 1.1890–1.1900. Above that, the market would start focusing on the 1.2000 zone and the upper end of the channel. The 14-day RSI moving inside the 40–60 band and the PPO drifting just below zero confirm a sideways bias after an earlier rally rather than a fully formed downtrend.

Inflation, ECB timing and what that means for EUR

The next few inflation prints will determine how aggressively the ECB can stay on hold. German HICP is expected to rebound to around 0.5% month-on-month, keeping the annual rate near 2.1%. Eurozone headline CPI is projected to soften to about 1.7%, with core holding slightly above 2.0%. Those numbers signal that the ECB is close to its price-stability objective and can avoid fast rate cuts. For the euro, that backdrop supports the idea that dips in EUR/USD toward 1.1748–1.1670 are opportunities rather than confirmations of a new bearish trend.
If the data undershoot sharply, for example with euro-area headline well below 1.7% and core sliding under 2.1%, markets will bring forward rate-cut expectations. That scenario would put 1.1742 and 1.1670 under pressure and shift attention toward the 1.1600 channel base. A stronger-than-expected inflation profile, with yearly figures holding above 2.0% and core anchored near 2.3%, would push easing expectations further out, supporting a break of 1.1835 and a test of 1.1890–1.1900.

Fed stance, upcoming US data and EUR/USD directional bias

Fed policy remains the other key leg of the EUR/USD equation. With consumer confidence at 91.2 and inflation still not convincingly subdued, officials have little incentive to cut rates in March or April. The next big test is US PPI. Consensus looks for some moderation versus the previous reading. A hot print would strengthen the case for staying restrictive and likely drive DXY toward 98.40, pulling EUR/USD back toward 1.1740 and perhaps the 1.1670 support band.
A benign or soft PPI outcome would reduce pressure on the Fed to sound hawkish, especially if combined with calmer tariff rhetoric. Under that scenario, the dollar’s recent floor around 97.64 becomes vulnerable, and EUR/USD would have a clearer path to push through 1.1820–1.1835 and target 1.1890–1.1900. The rate-differential story therefore favours a neutral-to-mildly positive bias for the euro as long as the Fed and ECB both signal patience instead of active easing cycles.

Trading stance on EUR/USD: Buy, Sell or Hold

The current configuration in EUR/USD is a textbook consolidation inside a broader uptrend channel: price has corrected from the highs, is holding above 1.1670 and 1.1600, and is compressing between 1.1740 and 1.1835 while the dollar index stalls below 98.4. Support is dense underneath, while resistance overhead is relatively thin until 1.1900–1.2000.
Given that structure, the bias favours Buy EUR/USD rather than chasing fresh shorts at current levels. Pullbacks into 1.1790–1.1748 can be treated as accumulation zones as long as daily closes stay above 1.1670. A break under 1.1670 would shift focus to 1.1600 and force a reassessment of the bullish channel narrative. On the upside, 1.1820 and 1.1835 remain the first hurdles; a sustained push through those levels opens 1.1890–1.1900 and puts 1.2000 back on the radar.

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