EUR/USD Price Forecast: Pair Defends 1.1770 as Fed Cut Bets Rise and Dollar Rally Stalls

EUR/USD – Consolidation above 1.1770 while the Dollar stalls below 98.00

EUR/USD price – defending 1.1770 inside a still-bullish structure

EUR/USD is trading around 1.1770–1.1790, sitting directly on a key support pocket that has defined the latest leg of the move. The pair has pulled back from a recent top near 1.2050, but the medium-term structure from the 1.1578 low still shows higher highs and higher lows, which signals a pause in an uptrend rather than a completed top. Spot is hovering around the 20-day EMA near 1.1792, which is gently sloping higher. That average, together with the 1.1780–1.1820 band, is the operational pivot: maintaining this zone keeps the bullish profile intact, losing it would open a deeper corrective phase.

USD dynamics – weaker jobs data drag DXY under 98.00 and support EUR/USD dips

The pressure point in this phase is the US Dollar, not the euro. The US Dollar Index (DXY) is trading around 97.78–97.85, unable to break cleanly above 98.00 after its latest bounce. The move is driven by clear softening in US labor data. Initial jobless claims rose to 231,000 for the week ending January 31 versus 212,000 expected and 209,000 the previous week. At the same time, ADP private payrolls increased only 22,000 jobs in January, well below the 48,000 economists expected and down from 37,000 in December. This combination undermines the narrative of a robust labor market and forces a re-pricing of the Federal Reserve path toward a more dovish stance.

Rate expectations have shifted accordingly. The probability of a 25 bps cut in March has jumped to about 22.7% from 9.4% earlier in the week, and markets now lean toward June as the likely starting point for the easing cycle. Even so, the Fed is not surrendering the hawkish bias; Lisa Cook has signalled she will not back further rate cuts without clearer and more consistent evidence of disinflation, and she remains more concerned about slow progress on inflation than about a single soft jobs run. That is why DXY is under pressure but not collapsing. For EUR/USD, this mix translates into a supportive backdrop on dips near 1.1770, while upside breakouts still need a stronger macro catalyst.

Euro and ECB stance – rate hold limits downside but does not create an aggressive euro bid

On the euro side, the ECB left policy unchanged and reiterated that inflation is expected to stabilise near 2% in the medium term, while explicitly highlighting an “uncertain geopolitical environment.” That combination signals a central bank willing to sit tight: there is no desire to tighten more into weak growth, and at the same time no rush to slash rates ahead of the Fed.

The single currency remains “broadly under pressure” in relative terms because euro-area growth is fragile and data surprises are not strong, but that does not automatically justify a break of EUR/USD below structural supports. With the ECB holding and the Fed gradually pulled toward cuts by weak labor data, the rate-differential story does not favour a sharp euro collapse at this stage. As long as the ECB avoids front-running the Fed on easing, EUR/USD can justify trading in the upper half of its recent range with 1.17–1.18 acting as a key demand zone.

Technical picture for EUR/USD – 1.1770 is the hinge between continuation and deeper correction

Technically, EUR/USD is in textbook consolidation after a strong impulsive rally. The move from 1.1578 to 1.2079 created a clear upside leg. The current pullback has retraced into the 61.8% Fibonacci retracement around 1.1770, which coincides with a cluster of other supports. This 1.1768–1.1770 region now acts as the hinge of the entire pattern.

On intraday structures, the pair is sitting just above the 200-period EMA on the 4-hour chart near 1.1770, which functions as dynamic trend support. That alignment – Fib confluence plus long-term intraday average – is exactly where buyers typically defend positioning if the trend is still valid. The 14-day RSI near 51 shows momentum has cooled from previously elevated levels but has not flipped into a bearish regime. There is no strong bearish divergence and no clean breakdown through key averages, which reinforces the view that this is a sideways digestion phase rather than the start of a downtrend.

On the upside, the 50% retracement at 1.1826 is the first barrier that needs to be reclaimed. A daily close above 1.1826 would reopen the path toward the 1.1900 psychological level and then into the 1.1980–1.2050 resistance band. On the downside, a decisive break below 1.1768–1.1770 would expose 1.1730 as the next obvious target, with deeper risk toward the 78.6% retracement at 1.1684. Even a slide into 1.1684 still counts as a correction within the broader ascending structure as long as the 1.1578 base remains intact.

Macro catalysts – why UoM sentiment and inflation expectations matter directly for EUR/USD

Near-term direction revolves around the University of Michigan Consumer Sentiment Index and one-year inflation expectations. Consensus is for sentiment to slip from 56.4 to 55.0, signalling weaker confidence, while prior one-year inflation expectations stood at 4%. A print that confirms cooling sentiment without a significant collapse in inflation expectations contains a clear message: demand momentum is slowing, the economy is losing some steam, but the inflation problem has not fully disappeared.

In that setup, the market tends to ramp up speculation about Fed cuts later in the year, especially when the labour market is already flashing yellow through 231,000 jobless claims and 6.542 million JOLTS job openings compared with 7.2 million expected and 6.928 million previously. That combination is typically negative for the dollar and positive for EUR/USD, because it pushes investors toward a world where US yields have to adjust lower while the ECB can maintain a slower easing timetable. Under that configuration, EUR/USD has room to pivot higher from 1.1770 toward 1.1826 and 1.1900.

The opposite scenario is straightforward. If sentiment beats expectations convincingly and inflation expectations ease sharply below the prior 4% reading, the narrative shifts toward a US consumer that remains resilient while price pressures cool. In that case, the Fed can credibly resist early cuts, the DXY can defend the 97.60–98.30 range more decisively, and EUR/USD risks sliding from 1.1770 toward 1.1730 and 1.1684.

DXY, GBP/USD and the broader FX tape – cross-checks that confirm the EUR/USD story

The DXY configuration confirms that the dollar is not in full control. The index has bounced from a late-January low near 95.60 to around 97.85, tracking within a rising short-term channel and staying above the 50-period EMA around 97.60 on the 2-hour chart. That profile shows a tactical recovery but not a dominant trend: DXY is still below the 200-EMA, and resistance between 98.25 and 98.90 aligns with former breakdown levels and key Fibonacci retracements. Only a sustained break above 98.30–98.90 would shift the structure into a more robust dollar uptrend with potential toward 99.50.

Cross-pairs behave consistently with the EUR/USD picture. GBP/USD trades near 1.3560 after pulling back from about 1.3850, but price is still resting above a rising trendline and the 200-EMA around 1.3520. Selling pressure stalled close to the 61.8% retracement near 1.3580, and the RSI in the low-40s indicates a slowdown in downside momentum instead of an aggressive unwind. This pattern – major FX pairs defending higher supports while the dollar struggles to clear resistance – aligns with EUR/USD holding the 1.1780–1.1820 band rather than breaking down impulsively.

Trading map for EUR/USD – practical zones for positioning and risk management

Translating the structure into levels, EUR/USD currently trades in a well-defined battlefield. On the support side, the 1.1768–1.1770 band is the primary pivot: it combines the 61.8% retracement of the 1.1578–1.2079 rally with the 4-hour 200-EMA, and it marks the point where medium-term buyers are expected to show up if the uptrend is still valid. Below that, 1.1730 is the next logical downside objective, followed by the 78.6% retracement at 1.1684. A sustained move through 1.1684 would represent a much more serious warning that the larger bullish structure is deteriorating.

On the resistance side, the first task for the market is to reclaim the 1.1826 zone, which corresponds to the 50% retracement of the last leg. Clearing and holding above 1.1826 would put 1.1900 back into play as an intermediate psychological target. Beyond that, the 1.1980–1.2050 pocket is where profit-taking and option-related flows are likely to intensify again, given that it hosted the recent swing high. Until either side of this range breaks in a convincing way, the dominant mode is consolidation inside a medium-term uptrend.

Bias and decision on EUR/USD – rating the pair at current levels

With EUR/USD sitting just above 1.1770, DXY capped below 98.00, US jobless claims at 231,000, ADP jobs at 22,000, JOLTS openings at 6.542 million versus 7.2 million expected, and the ECB holding policy while the Fed is pulled gradually toward an easing cycle, the balance of evidence still favours the upside rather than a full bearish reversal. Price action respects moving-average support, momentum has cooled without turning negative, and the higher-high structure from 1.1578 remains intact.

In this context, the stance on EUR/USD is bullish with a Buy-leaning view, with the 1.1770–1.1730 corridor as the area that should hold if that view is going to remain valid. As long as the pair trades above that band, the logical upside objectives are 1.1826, then 1.1900, and eventually 1.1980–1.2050 once the range resolves. A clean daily close below 1.1684 is the point where this constructive view would need to be reassessed, because it would mark a transition from healthy consolidation into a more meaningful trend break.

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