EUR/USD Price Forecast - Eur Holds 1.1650 While DXY Camps Near 99 and 1.16 Support

EUR/USD Price – Sitting Near 1.1650 With 1.16 Support Under Pressure

EUR/USD: Trading Around 1.1645–1.1660, Leaning on the 1.1615–1.1620 Floor

EUR/USD is rotating in a narrow band around 1.1645–1.1660, a few pips above a one-month low at 1.1618 and clustered support in the 1.1615–1.1635 zone. Repeated tests of this area since last week, combined with long lower wicks on recent 2-hour and 4-hour candles near 1.1620, show that bids exist, but they are defensive, not aggressive. Structurally, the pair is trapped inside a descending channel from late-December highs, while still clinging to a broader rising trend line from November. As long as spot holds above roughly 1.1590–1.1600, the medium-term uptrend is technically alive, but price action is clearly tilting toward the lower half of the recent 1.1500–1.1750 range.

EUR/USD: Macro Backdrop – Soft Core CPI, But Fed Cuts Pushed Further Out

US inflation is no longer the driver it was in 2025, but it still sets the tone for EUR/USD. December headline CPI printed exactly in line with expectations at 0.3% month-on-month and 2.7% year-on-year, while core CPI slowed to 0.2% m/m and 2.6% y/y, a four-year low. That combination – cooling core, steady headline – would normally undermine the dollar and support EUR/USD, yet the reaction has been muted because the data did not change the Federal Reserve path in any meaningful way. Fed funds futures still price a hold at the late-January meeting and have already cut the probability of a March rate reduction down to roughly a quarter from about 40% a week earlier. The message for the pair is simple: inflation is falling, but not fast enough to unlock an early easing cycle, so the dollar keeps its rate advantage and EUR/USD stays capped.

EUR/USD: US Labor and Demand – Job Growth Steady, Retail Sales in Focus

The labor backdrop complements the CPI picture and keeps USD supported on dips. The latest ADP four-week average shows roughly 11.75K new jobs per week, extending a five-week run of positive prints. This is not a hiring boom, but it confirms a stable jobs market with no obvious stress that would push the Fed toward emergency action. On the demand side, markets are watching US Retail Sales closely: consensus looks for a 0.4% m/m rebound in November headline sales after a flat October, with ex-auto sales also at 0.4%. A print near or above those levels would reinforce the “soft-landing” narrative – inflation easing, growth holding – which is exactly the setup that allows the Fed to sit tight and keeps two modest rate cuts in 2026 as a base case instead of a rapid easing cycle. For EUR/USD, resilient US demand limits downside in real yields and keeps any dollar selloff shallow and temporary.

EUR/USD: Fed Independence Drama, Trump and Powell – Why It Still Supports the Dollar

Politics around the Federal Reserve are no longer a side show; they are directly in the USD risk premium. The Department of Justice criminal inquiry into Jerome Powell’s testimony about Fed building renovations, plus President Trump’s public pressure campaign for lower rates, triggered a sharp move in the dollar to start the week. Powell responded with a video accusing the administration of attacking the Fed’s independence, and within days, a coalition of central bank heads – including the ECB, BoE and BoC – issued a joint statement defending central bank independence as a cornerstone of price, financial and economic stability. That coordinated backing calmed the immediate panic, but it also highlighted the tail risk: if political pressure on the Fed escalates, markets will price a more unstable US policy regime. For now, that tension is paradoxically dollar-positive: investors hedge by buying both Treasuries and USD, while gold absorbs the pure “anti-system” flow. EUR/USD is therefore trading against a USD that has both rate support and a safe-haven bid linked to policy uncertainty.

EUR/USD and DXY: Dollar Index Stuck Around 99, But Structure Still Supports USD

The US Dollar Index (DXY) helps explain why EUR/USD cannot break higher despite softer core inflation. On the 2-hour chart, DXY is oscillating around 99.10–99.20, just under a near-term resistance band at 99.26–99.31. Above that, a more important ceiling sits at 100.22, the level that repeatedly capped rallies in the second half of 2025. On the downside, support is layered at the 23.6% Fibonacci retracement near 99.00, then 98.80 and 98.58. The 50-period moving average is comfortably above the 200-period, and RSI around 55–60 confirms that momentum is positive but not overheated. The weekly DXY chart shows a broad higher-low base after the first-half-2025 selloff, with a wide lower wick on the current candle as buyers defended support and pushed the index back toward recent highs. That combination – constructive weekly structure, firm short-term MAs, and tight consolidation under resistance – points to ongoing upside risk in the dollar. Since the euro is 57.6% of the DXY basket, any breakout through 99.60 and towards 100.22 would translate into renewed pressure on EUR/USD supports.

EUR/USD: Technical Structure – Descending Channel Against a Fragile Uptrend

Technically, EUR/USD is caught between a tactical downtrend and a still-intact medium-term base. On the daily chart, the pair has been sliding within a descending channel from late-December highs, with rallies failing near 1.1685–1.1700 and lows clustering around 1.1615–1.1635. Multiple desks identify a rising trend line from November that currently intersects just above 1.1600, creating a confluence zone with the early-December low near 1.1600 and the one-month trough at 1.1618. That 1.1590–1.1618 band is now the key pivot: hold it, and the broader constructive structure survives; lose it, and the path opens toward 1.1542–1.1550, then the psychologically important 1.1500 area that acted as firm support in November. Intraday, the 4-hour MACD is essentially flat, showing a lack of direction, while RSI has slipped below 43 on one major feed, indicating fading demand but not yet a capitulation. Price is hugging the lower half of the channel, which statistically favors another test of 1.1615–1.1600 before any meaningful bounce.

EUR/USD: Short-Term Levels – Support at 1.1590–1.1635, Resistance at 1.1685–1.1780

From a trading level perspective, EUR/USD is extremely well-defined:
Immediate support sits at 1.1635 (intraday low) down to 1.1615–1.1618 (one-month lows highlighted by several desks). Below that, 1.1593–1.1600 is a composite floor where the November trend line, prior lows and channel bottom converge. A clean break and close below roughly 1.1590 would expose 1.1542–1.1550 as the next demand area, with 1.1500 as the “big figure” support from November that marks the bottom of the current structural range. On the topside, initial resistance comes at 1.1669–1.1675, which combines the descending channel top on some 4-hour charts with a recent failure zone and a local 2-hour trendline. Above that, 1.1685–1.1710 is the first real cap: it includes earlier swing highs, the 50-period moving average on intraday charts and what used to be a weak spot in the price action. If bulls can force a daily close above 1.1700, the next objectives align around 1.1740 and then 1.1740–1.1780, where previous late-December highs and the 200-period averages cluster. Until one of these boundaries decisively breaks, EUR/USD remains a range-trade driven by US data and dollar sentiment.

EUR/USD: Moving Averages and Momentum – Neutral, But Tilting Bearish

Momentum and trend indicators reinforce the idea of a pair in balance but leaning lower. On the 4-hour chart, the 50-period moving average sits just above spot, roughly in the 1.1690–1.1710 region, acting as dynamic resistance after the early-January rejection. The 200-period moving average is higher still, adding an extra cap to the 1.1740–1.1780 band. This configuration – price below both MAs, with the shorter average starting to roll over – is typical of a maturing corrective phase inside a larger range, not of a fresh bull leg. RSI on multiple intraday feeds hovers between 45 and 50, confirming a neutral tone with no extreme oversold conditions; however, RSI has failed to break above 60 on recent rebounds, signaling that buyers do not have the momentum to force a sustained squeeze above 1.1700 yet. Combined with a nearly flat MACD and a descending price channel, the technical picture implies that bounces are more likely to be sold than breaks are to be chased.

EUR/USD vs Other USD Pairs: Why EUR Remains the Weak Link

Cross-checks against other majors show that EUR, not USD, is the weak side of EUR/USD. GBP/USD is holding a constructive structure above 1.3390–1.3414, carving out potential higher lows despite the same US backdrop. USD/JPY, by contrast, has printed fresh yearly highs and is pressing toward the 160.00 area, with prior resistance at 159.19 now an attractive level for dip buyers. That divergence tells you the core story: when investors want to express USD strength, they choose EUR/USD and USD/JPY rather than dumping sterling. When they want to express USD weakness, they lean more on GBP/USD than on EUR/USD. As long as this pattern persists – with USD/JPY grinding higher and GBP/USD defending key supports – EUR/USD will tend to underperform on the upside and overreact on the downside around every US data point or Fed headline.