EUR/USD Price Forecast - Eur at 1.1755: ECB Hold + Fed Chair Risk Put 1.2020 in Play

EUR/USD Price Structure at the Turn of 2026: A Coiled Market Sitting on a Macro Fault Line

EUR/USD Price Is Not “Strong” or “Weak” — It Is Pressurized at 1.1750–1.1800

EUR/USD is trading around 1.1750–1.1760, repeatedly probing a zone that has rejected price multiple times since late Q3. This is not random congestion. It is the convergence of a 2025 high-week close (1.1747–1.1755), a 61.8% retracement of the September pullback, and the upper boundary of the medium-term advance that started from the 2025 lows.
Price is holding, not breaking. That distinction matters. Markets that hold below resistance without selling off are storing energy, not distributing it.

ECB Policy Has Quietly Shifted the Euro’s Rate Floor

The European Central Bank left rates unchanged in December, but the messaging did more work than a cut or hike would have. The signal was explicit: no pre-commitment to easing, decisions remain data-dependent, and policy will be reviewed meeting by meeting.
That language matters because it quietly removed the near-term easing tail risk that had capped EUR/USD for most of 2024. President Christine Lagarde reinforced that inflation progress does not automatically translate into rate cuts. The market response has been structural, not speculative: the euro stopped selling rallies and started defending pullbacks above 1.16.

The Dollar’s Weakness Is Political Before It Is Monetary

On the U.S. side, the pressure on the USD is not coming from inflation data alone. It is coming from institutional uncertainty. President Donald Trump has openly stated a preference for a more rate-friendly Federal Reserve chair once Jerome Powell’s term ends in May.
Markets do not price personalities; they price credibility risk. The idea that the next Fed chair could lean overtly dovish has already started to compress the USD risk premium, even before any formal nomination process begins. That is why EUR/USD rallies are not being faded aggressively despite elevated levels.

Rates Divergence Is Narrowing — And EUR/USD Trades That First

Futures markets are pricing ~50bps of Fed cuts ahead, while the ECB is increasingly priced for policy inertia through much of 2026. That narrowing differential matters more than absolute rate levels. Historically, EUR/USD does not need the ECB to be hawkish — it only needs the Fed to lose relative dominance.
At 1.1750, the pair is already reflecting this shift. The question is not whether divergence exists — it does — but whether it is sufficient to force a regime break above 1.1800–1.1875.

Daily Structure Confirms Trend Control Above 1.1635

On the daily chart, EUR/USD is trading well above the 100-day EMA at ~1.1635, which is sloping higher. That moving average has acted as a dynamic bid on every corrective attempt since mid-November.
Momentum confirms the structure: the RSI near 59–60 is constructive, not stretched. This is the zone where trends extend, not reverse. Importantly, momentum has not diverged against price — a critical distinction from Q3, when upside attempts were fading on weakening RSI.

Volatility Compression Is Not Bearish — It Is the Setup

Bollinger Bands have narrowed materially, with the mid-band around 1.1738, almost exactly where spot price is hovering. This is classic energy compression after a directional move, not exhaustion.
The upper band sits near 1.1820. A daily close above 1.1820 would not be cosmetic — it would represent a volatility release that historically produces measured extensions of 120–180 pips in this pair.

Weekly Chart Shows Why 1.1750 Is a Decision Level, Not a Ceiling

Zooming out, the weekly structure shows EUR/USD pressing into confluent resistance at 1.1747–1.1775 — a zone defined by:
• the 2025 high-week close
• the 61.8% retracement of the September decline
• the upper boundary of the 2025 advance

Markets do not turn lower from this type of structure without first breaking support. That support sits at 1.1497–1.1505, the zone defined by the March 2020 / 2022 highs and the 78.6% retracement of the July advance. As long as 1.1500 holds, this is a pause in an uptrend, not distribution.

The Monthly Map Explains Why Bulls Are Patient

On the monthly chart, EUR/USD surged more than 17% from the yearly lows, reaching into a multi-year resistance band at 1.1917–1.2020. That zone is not arbitrary. It is defined by:
• the 100% extension of the 2022 advance
• the 38.2% retracement of the 2008 decline
• the upper parallel of the 2022 pitchfork

Price has not broken this band yet — but it is coiling just below it. Monthly momentum is at its highest since 2021, which historically marked exhaustion only after a parabolic run, not after consolidation. This argues for continuation risk, not collapse.

What a Break Above 1.2020 Actually Unlocks

A monthly close above 1.2020 is not a headline move — it is a structural event. Above that level, the chart opens toward:
• 1.2218 (2021 high-week close)
• 1.2350–1.2414 (2018–2021 highs)
• 1.2992 (1.618 extension of the 2022 advance)

These are not short-term targets. They are trend milestones that only activate once 1.2020 is accepted, not briefly pierced.

Short-Term Risk: Jobs Data Can Trigger a Shakeout, Not a Trend Reversal

The immediate event risk is U.S. jobs data. A strong print can lift yields and force a pullback. But context matters: unless such a move breaks 1.1500, it remains a corrective reset inside a broader uptrend.
Deeper support layers sit at 1.1394, then 1.1254–1.1275, where the 52-week moving average, 38.2% yearly retracement, and 2023 swing high converge. Those levels would be buyers’ territory, not trend failure.

Price Targets Are Conditional, Not Hope-Driven

Upside path (structure intact):
• Hold above 1.1635 → pressure 1.1800–1.1875
• Clear 1.1875 → rotation toward 1.2020
• Accept above 1.2020 → 1.2218, then 1.2350–1.2414

Downside risk (structure threatened):
• Lose 1.1500 → deeper correction toward 1.1394
• Break 1.1275 → trend invalidation, reassessment required

Final Positioning Call on EUR/USD Based on the Full Data Set

After integrating ECB policy stance, U.S. political risk, rate-differential repricing, and multi-timeframe technical structure, the conclusion is not neutral.

EUR/USD is a BUY on dips while above 1.1500, with 1.2020 as the structural upside trigger.
The risk is not upside exhaustion — the risk is temporary correction before continuation. Until price proves otherwise by breaking key supports, the dominant pressure remains upward, not sideways, not lower.

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