EUR/USD Price Forecast: Pair Clings To 1.1750 As DXY Holds Around 98.00
Macro Drivers For EUR/USD: Fed Cuts, Peace Hopes And Trade War Noise
The EUR/USD rate is trading around 1.1760–1.1780 after failing to extend above the 1.1800–1.1808 zone last week. Price is digesting a strong December rally in ultra-thin year-end liquidity. On the macro side, three Fed cuts in 2025 have pushed the funds rate down to 3.50%–3.75%, with futures still pricing two to three additional cuts in 2026. That path keeps real yields under pressure and, structurally, caps the USD on rallies.
At the same time, markets are reacting to mixed geopolitical headlines. Trump’s comments that a Ukraine peace deal is “a lot closer” help the EUR through reduced war risk in Europe, but escalation around China–Taiwan lifts safe-haven demand into the USD. Add Trump’s renewed global tariff push and looming recession chatter, and EUR/USD is caught between a softer rates backdrop and periodic risk-off spikes that temporarily support the dollar. Thin holiday volumes amplify every headline, which is why a 30–40-pip swing around 1.1760 can happen on relatively modest news flow.
US Dollar (USD) Index Near 98: Rate-Cut Story Versus Safe-Haven Bid
The US Dollar Index (DXY) trades close to 98.00–98.10, stabilizing after bouncing from 97.73–97.80 support. Technically, the 2-hour chart shows a fragile recovery: the 50-EMA sits near 98.12 and acts as first resistance, while the 100-EMA around 98.55–98.60 is the more important ceiling. The move is also capped by the 38.2% Fibonacci retracement of the prior downswing around 98.12, which is why upside attempts stall in that area.
If DXY can push through 98.25, the next magnet is 98.55, and above that a squeeze toward 99.00 cannot be ruled out. Failure to clear 98.25 keeps the door open for another retest of 97.75. For EUR/USD, a DXY rejection at 98.25–98.55 supports a rebound back above 1.1800, while a clean break higher in the index would pressure the pair toward 1.1700 and potentially lower.
Euro (EUR) Fundamentals: ECB Still Less Dovish Than The Fed
The EUR remains underpinned by a relatively less dovish ECB versus a Fed that has already cut 75 bps in 2025 and is signalling further easing in 2026. Markets still expect at least two Fed cuts next year, while the ECB is moving more cautiously. This policy divergence is why EUR/USD is still trading near a three-month high just above 1.1800, despite a firm DXY around 98.00.
Eurozone growth is far from impressive, but the combination of slower US labour markets, a 4.3% annualised US GDP that markets see as unsustainable, and persistent political risk in the US keeps medium-term pressure on the USD. That backdrop makes deep EUR/USD dips toward 1.1700 more likely to attract buyers rather than trigger a trend reversal, unless macro data or the Fed narrative shifts decisively back toward tighter policy.
Short-Term Price Action In EUR/USD: Four-Day Pullback Inside A Rising Channel
Spot EUR/USD has declined for four consecutive sessions, sliding from a peak just above 1.1800 (around 1.1805–1.1808) to the current 1.1760 area. This is a controlled pullback, not a collapse. The pair is still trading inside an ascending channel on both the 2-hour and 4-hour charts.
On the 2-hour view, buyers are actively defending the lower boundary of that channel around 1.1750. Every dip into the 1.1750–1.1760 band meets demand, confirming it as short-term support. On the 4-hour chart, the retracement looks like a classic pause after a strong rally rather than the start of a new downtrend. As long as the pair stays above 1.1750, the path of least resistance remains higher.
Daily Technical Picture For EUR/USD: EMAs, RSI And Trendline Support
The daily chart for EUR/USD still leans bullish despite the pullback. Price is holding above the nine-day EMA, now rising through 1.1757, and the 50-day EMA at 1.1673. The nine-day EMA is above the 50-day EMA, a configuration that usually indicates a healthy uptrend, with the faster average acting as dynamic support.
Momentum indicators confirm that view. The 14-day RSI sits near 63.9, above the 50 midline, down from overbought levels but still comfortably in bullish territory. This shift from above 70 to the low 60s is exactly what you want in an uptrend that is cooling its momentum without breaking. The pair is also sitting on an ascending trendline from mid-December, clustered around 1.1755; this line is the key level that separates a simple consolidation from a deeper correction.
Intraday Structure For EUR/USD: Channel Range Between 1.1750 And 1.1850
Zooming back to the intraday structure, EUR/USD is boxed between support at 1.1750–1.1760 and resistance between 1.1805 and 1.1850. The lower edge of the rising channel coincides with the nine-day EMA and the 1.1755 trendline, so the market is watching that band very closely.
On the topside, the initial resistance sits at 1.1800–1.1805, where price stalled on December 16 and 24. Above there, the upper channel line and a prior projection zone converge near 1.1850, which is the natural short-term target if buyers regain control. A break above 1.1850 would shift focus to the 1.1863 Fibonacci extension of the December rally and then the high-time-frame zone around 1.1918–1.1930, the highest region since June 2021.
Key Support Zones On EUR/USD: 1.1755, 1.1700, 1.1673 And 1.1589
Below current levels, the nearest support is the 1.1750–1.1757 cluster (trendline plus nine-day EMA). A decisive daily close below 1.1750 would be the first real warning that bulls are losing control of the short-term structure. If that break happens with DXY pushing above 98.55, downside risk opens toward 1.1700, where December 17–19 lows are concentrated.
The next technical anchor is the 50-day EMA at 1.1673. As long as EUR/USD trades above 1.1673, the broader uptrend from mid-December remains valid. Only a clean break under 1.1670–1.1673 would turn the structure into a deeper correction, bringing the 1.1589 three-week low back into play as a more serious medium-term support.
Upside Targets For EUR/USD Bulls: 1.1805, 1.1863 And 1.1918–1.1930
On the bullish side, a rebound from 1.1750–1.1760 that clears 1.1805 puts the recent three-month high at 1.1808 back on the screen almost immediately. Once above that band, the channel top around 1.1850 and the 1.1863 Fibonacci extension are the logical targets for momentum traders.
If macro data and Fed communication continue to support the idea of further US easing in 2026 while the ECB stays comparatively cautious, EUR/USD has room to stretch toward the 1.1918–1.1930 zone. That region marks the strongest resistance since mid-2021 and would likely attract significant profit-taking on the first approach. For now, this is an extension target rather than a base case for this week, but it is relevant for positioning into early 2026 if support levels hold.
Cross-Market Context: Risk Sentiment, Precious Metals And EUR/USD Flows
Broader market context also matters for EUR/USD. Equities have rallied on Fed rate-cut bets, with global indices closing 2025 near record highs, while precious metals like gold and silver have seen explosive moves followed by sharp pullbacks. Gold has traded above $4,400 an ounce and then slid toward $4,373–4,460 in volatile sessions, while silver spiked above $80 before dropping back into the low-70s.
These swings tell you that hedging demand against geopolitical and fiscal risk remains strong. When risk-off pressure spikes – for example, on China–Taiwan headlines – the USD picks up a safe-haven bid, weighing temporarily on EUR/USD. But with the Fed already at 3.50%–3.75% and markets pricing additional cuts, every wave of dollar strength has less staying power unless accompanied by genuinely bad European news. That asymmetry supports a buy-the-dip mentality on EUR/USD as long as technical levels are respected.
Trading Strategy On EUR/USD: Buy-The-Dip Bias, Bullish While Above 1.1700
From a trading standpoint, the setup on EUR/USD is still constructive. The pair is consolidating just above 1.1750 inside an ascending channel, with the nine-day EMA at 1.1757, the trendline at 1.1755, and the 50-day EMA at 1.1673 all sloping higher. Momentum has cooled from overbought but remains positive, and the macro backdrop still favours a softer USD over the next few quarters.
The clean strategy is buy-the-dip, not chase the breakout. The attractive zone for fresh longs is 1.1755–1.1700, scaling in closer to 1.1720–1.1700 if DXY tests 98.25–98.55 and intraday stops trigger. Protective exits make sense just below the 50-day EMA, around 1.1660–1.1670, because a daily close under that band would signal that the bull channel is broken and the risk has shifted toward 1.1589 or lower.
Upside, the first profit-taking area is 1.1805–1.1810, then 1.1850–1.1863, with a stretch target around 1.1918–1.1930 if the Fed minutes confirm the market’s pricing for 2026 cuts and risk sentiment stays intact.
Verdict on EUR/USD: Buy, with a bullish bias while spot trades above 1.1700; downgrade to Sell only on a daily close below 1.1670, which would invalidate the current uptrend structure.
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