EUR/USD Price Forecast - Euro to Dollar Steadies at 1.1650 Ahead of Fed Cut and Trump–Xi Trade Breakthrough

EUR/USD Holds Above 1.1650 as Fed Rate Cut and Trump–Xi Trade Progress Drive Sentiment

The EUR/USD pair continues to trade with upward momentum, holding near 1.1650, its highest level in a week, as markets balance optimism over U.S.–China trade progress with expectations of a Federal Reserve rate cut. The pair’s rise follows a steady five-day rally from 1.1580 lows, reflecting stronger risk appetite and renewed pressure on the U.S. dollar after President Donald Trump’s comments signaling confidence in reaching a trade deal with Chinese President Xi Jinping later this week. The euro’s resilience against the dollar comes despite weaker economic data from Europe, highlighting how geopolitical sentiment has overshadowed short-term fundamentals.

Fed Decision and Market Positioning Shape the Short-Term Outlook for EUR/USD

The Federal Reserve’s policy announcement remains the central market focus, with traders pricing a 98% probability of a 25-basis-point rate cut, bringing the federal funds rate to 3.75%–4.00%. The cut is widely expected after soft inflation readings and growing signs of labor market fatigue. However, investors are watching closely for Chair Jerome Powell’s forward guidance on whether another cut in December remains likely. Any indication of continued easing could weaken the U.S. dollar further, providing room for EUR/USD to challenge the next key resistance levels at 1.1670, 1.1730, and 1.1780. On the downside, strong supports remain at 1.1620, 1.1575, and 1.1545, where buyers are expected to defend the lower boundary of the pair’s recent consolidation zone.

U.S.–China Trade Truce Boosts Risk Appetite and Weakens Dollar Demand

President Trump’s Asian tour has become a major catalyst for global market sentiment. His agreement with Japanese Prime Minister Sanae Takaichi to secure rare-earth mineral supply chains and his remarks that the meeting with Xi Jinping “will work out well” have encouraged investors to move away from safe havens. Treasury Secretary Scott Bessent confirmed that the 100% tariff threat on Chinese imports has been withdrawn, while Beijing agreed to delay rare earth export restrictions, providing immediate relief to markets. As risk appetite strengthens, the dollar’s safe-haven bid has diminished, allowing EUR/USD to climb steadily even as eurozone data remains soft.

Eurozone Data Weakens but Fails to Derail the Uptrend

Recent eurozone releases have been underwhelming, yet the single currency continues to attract inflows as traders position for potential dollar softness. The German GfK Consumer Confidence Index dropped to -24.1 in November from -22.3 in September, its lowest in seven months and well below expectations of -22.0. Meanwhile, the ECB’s consumer inflation expectations survey showed a slight easing to 2.7% for the next 12 months, while three- and five-year expectations stayed at 2.5% and 2.2%, respectively. Despite these declines, the euro remains supported by the belief that the ECB will hold rates steady, while the Fed continues to ease. The narrowing of interest rate differentials between the eurozone and the U.S. has been one of the most significant drivers of EUR/USD’s recovery over the past week.

Technical Picture: Bulls Eye 1.17 Breakout as Trend Consolidates

Technically, EUR/USD remains within a multi-month consolidation range bounded between 1.1550 and 1.1750. The recent move above the 9-day EMA (1.1630) signals short-term bullish momentum, but the pair must close above 1.1670 to confirm a breakout. The Relative Strength Index (RSI) on the 4-hour chart remains slightly above 50, supporting modest bullish momentum, while the Moving Average Convergence Divergence (MACD) histogram shows narrowing green bars — an indication that upward movement remains cautious but intact. A sustained break above 1.1730 could open the path toward 1.1780, the October 1 high, whereas failure to hold 1.1620 could trigger a pullback toward 1.1575.

DXY Weakness Reinforces EUR/USD Recovery Momentum

The U.S. Dollar Index (DXY) is holding near 98.65, struggling to stay above the 99.14 resistance level as traders await the Fed’s policy outcome. The index broke below its short-term ascending trendline and is now testing the confluence zone of the 50-day EMA (98.82) and 200-day EMA (98.45) — a critical support band that often dictates directional bias. Momentum indicators suggest a weakening trend, with the RSI at 36, pointing to fading bullish strength in the dollar. This technical setup further favors the euro’s advance, as the greenback’s inability to sustain strength continues to encourage bullish positioning in EUR/USD heading into the Fed decision.

Central Bank Divergence and the Road Ahead

Market attention will immediately shift to the European Central Bank meeting following the Fed’s announcement. The ECB is expected to hold rates unchanged, with President Christine Lagarde likely reiterating a cautious stance amid weakening European demand. However, with U.S. monetary policy turning more accommodative, the interest rate spread between the two regions is narrowing. This convergence has historically benefited the euro, especially when global growth expectations improve. If the Fed signals further cuts while the ECB stays on hold, the EUR/USD pair could sustain its upward bias and potentially retest the 1.18 level in the short term

Trading Sentiment and Short-Term Scenarios

Investor positioning data suggests that speculative traders are beginning to unwind U.S. dollar longs. The pair’s stabilization above 1.1650 reflects controlled optimism, with most participants waiting for the FOMC statement and Powell’s press conference before taking fresh positions. Should the Fed strike a dovish tone, a breakout toward 1.1750–1.1780 becomes increasingly probable. Conversely, if Powell signals hesitation about further cuts, EUR/USD could temporarily dip toward 1.1600, where buyers are likely to re-emerge.

Verdict: Cautiously Bullish on EUR/USD Into Fed and ECB Week

The euro’s performance demonstrates notable resilience against the U.S. dollar, supported by improving risk sentiment and narrowing rate spreads. While immediate momentum remains contained within a tight band, the setup points to a cautiously bullish bias as long as the pair holds above 1.1620. A dovish Fed and stable ECB stance could propel EUR/USD beyond 1.1730, positioning the euro for a potential move toward 1.18 in November.

Decision: BUY ON DIPS — Accumulate between 1.1600–1.1620, targeting 1.1750–1.1780, with stop below 1.1540.

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