EUR/USD Price Forecast - Eur Holds 1.1700 Floor as Weak US Data and German HICP 2.2% Cap Dollar Strength

EUR/USD Price Outlook: 1.17 Handle Squeezed Between Weak US Data and Eurozone Slowdown

EUR/USD holds around 1.1700–1.1735 as both EUR and USD arrive damaged, not dominant

EUR/USD is circling the 1.1700 area with neither side in control. The pair has bounced from the 1.1658–1.1660 support band, printed intraday highs around 1.1735, and repeatedly failed to stay above the 1.1740 zone. On short-term charts, price is oscillating between roughly $1.1710 and $1.1728, with live quotes hovering near $1.1690–$1.1710, which matches the broader 1.17 handle narrative: the market respects the floor, but refuses to reward late buyers above resistance.

This range is not random. The $1.1658–$1.1680 area lines up with a nearly four-week low and a prior base, while $1.1735–$1.1755 clusters several technical barriers: the 100-hour simple moving average, a 50% Fibonacci retracement of the $1.1808–$1.1660 drop, and a short-term trendline that has capped every push since late December. The failed extension through $1.1740 and the drift back to $1.1710 tell you supply still sits overhead even as demand defends the downside.

Macro backdrop: DXY slips toward 98.20 as US manufacturing PMI at 47.9 undercuts the USD bid

On the dollar side, the macro tape is clearly softer than the previous “king USD” phase. The US Dollar Index has moved into its second day of losses, trading around 98.20 after a rejection close to 98.85. The index is still holding above a support shelf near 98.15, but the tone shifted from aggressive strength to cautious consolidation.

The trigger was weak US manufacturing data. The ISM Manufacturing PMI for December dropped to 47.9, worse than the prior 48.2 and below the expected 48.3. It is the third consecutive month in contraction territory and the weakest reading in about 14 months. New orders only managed 47.7, still firmly below the 50 expansion threshold, while the Prices Paid component stayed high at 58.5, signaling that disinflation is not clean or linear.

With the employment sub-index stuck in the mid-40s and the broader PMI under 50, the growth story behind the USD looks less convincing. The dollar is not collapsing, but the narrative has moved from “resilient US exceptionalism” to “industrial drag with lingering inflation,” which is a weaker backdrop for a sustained USD rally versus EUR.

Fed versus ECB: neutral Fed rhetoric versus an ECB seen done with cuts supports mild EUR/USD upside

Policy expectations now lean against a runaway USD. Fed officials are openly acknowledging the shift. One high-profile regional president described inflation as easing and current policy as “neutral,” while warning that the unemployment rate could “pop” higher. Markets have translated this combination—slower inflation, softer growth, and rising jobless risk—into a scenario where further aggressive hikes are off the table and cuts later in 2026 remain a credible path.

At the same time, pricing around the European Central Bank implies that the heavy lifting on rate reductions in the Eurozone is largely done for now. Investors increasingly assume the ECB is finished cutting, which effectively stabilizes the short-end yield differential. When one central bank is seen edging toward easing (the Fed) and the other is seen on hold (the ECB), EUR/USD tends to find a floor rather than break in a straight line lower.

This policy asymmetry is modest, not explosive, but it matters around $1.17. It helps explain why dips toward $1.1658–$1.1680 attracted buyers and why attempts to drive EUR/USD below $1.1655 have failed so far.

Eurozone data: Services PMI revision to 52.4 and German HICP at 0.4% m/m keep EUR capped but not broken

On the Euro side, the data is not pretty, but it is not catastrophic either. The Eurozone HCOB Services PMI for December was revised down to 52.4 from an initial 52.6, after posting 53.1 in November. That is a clear loss of momentum in the largest part of the economy. Services remain in expansion territory above 50, but the direction is down, and that erosion weighs on the euro’s growth premium.

Germany’s preliminary Harmonized Index of Consumer Prices is the next catalyst and will likely drive the next leg in EUR/USD around the 1.1700 level. The monthly HICP is expected to rebound by 0.4% after a sharp -0.5% drop, while the annual rate is seen easing to 2.2% from 2.6%. A 0.4% m/m rebound confirms that the prior negative print was temporary, but the fall in year-on-year inflation keeps headline price pressure reasonably close to target.

For the pair, that mix means the ECB has no strong incentive to turn hawkish again, but also no urgency to cut further. If the 2.2% YoY consensus is confirmed, the euro will not get a big upside surprise, yet it also avoids the kind of undershoot that would justify a more aggressive easing path. That’s another argument for EUR/USD holding a broad 1.1650–1.1800 range rather than collapsing.

US data flow: ISM at 47.9, S&P Services at 52.9 and NFP risk keep EUR/USD volatility elevated around 1.17

The US macro picture is also split between weak manufacturing and still-decent services. While ISM manufacturing is stuck at 47.9 with three straight months of contraction, preliminary S&P Global Services PMI for December stands at 52.9, down from 54.1 but still in expansion territory. That combination points to an economy slowing unevenly: factories under pressure, services moderating but not collapsing.

The real event risk sits later this week with Nonfarm Payrolls. Markets are bracing for a softer, but not disastrous, jobs print. If NFP and the unemployment rate confirm the “slowing but not crashing” narrative, the bias for the US Dollar Index around 98.20 is sideways to lower, especially if more Fed speakers lean into the idea that policy is at or slightly above neutral.

For EUR/USD, that setup argues for two-way volatility inside an established range. Stronger-than-expected NFP could knock the pair back toward $1.1660 and even re-test $1.1620 or $1.1590 if the market starts to re-price a more hawkish Fed. A weak jobs report, by contrast, would likely push EUR/USD through $1.1755 and reopen the $1.1805–$1.1808 zone.

Technical map for EUR/USD: 1.1658–1.1680 support, 1.1755–1.1808 resistance define the battlefield

Technically, EUR/USD is trading in a tight corridor with very clear edges. On the downside, buyers have stepped in repeatedly between $1.1658 and $1.1680. That band coincides with a four-week low and prior congestion. Below that, $1.1620 and $1.1590 are the next meaningful horizontal supports where prior consolidation occurred.

On the topside, the first serious barrier is $1.1735–$1.1755. Around $1.1735 you have a confluence of the 100-hour simple moving average and the 50% retracement of the $1.1808–$1.1660 drop. The $1.1740 area has already rejected price once, leaving long upper wicks that signal supply. Above $1.1755, attention shifts to $1.1765 and the previous swing high at $1.1808, where a reverse trendline and December’s peak intersect.

Structurally, shorter-term charts show a compression between a rising trendline from the November lows and a descending cap from late-December highs. That looks like a broad triangle: a series of higher lows from roughly $1.1658 and lower highs below $1.1808. Until one side breaks, the market will continue to fade extremes—selling near $1.1755–$1.1800 and buying near $1.1660–$1.1680.

Momentum and intraday signals: MACD turns higher, RSI recovers but still lacks a clean breakout

Momentum indicators confirm the “range with a mild bullish tilt” story. On the 1-hour chart, the MACD has crossed into positive territory and is edging higher, indicating that upside momentum is improving after the bounce from $1.1660. The Relative Strength Index on that timeframe is around 59, comfortably above the mid-line but not overbought, which usually fits a controlled advance rather than a blow-off spike.

On the 4-hour chart, however, RSI remains capped below 50, stuck in neutral-to-negative territory. That tells you the broader move from $1.1808 is still acting as a drag, even though the very short-term impulse is positive. The mixed signal is exactly what you expect near the middle of a range: intraday traders see a long setup from $1.1700, while swing traders still respect the risk of another test toward $1.1660 if data disappoints.

Price action around $1.1700 reflects that tension. Every dip toward $1.1700–$1.1710 finds demand, but every push toward $1.1735–$1.1740 meets selling. Until MACD and RSI align bullish across both intraday and higher timeframes, EUR/USD is unlikely to trend cleanly; it will keep punishing late entries at the extremes.