EUR/USD Price Forecast - Eur Stalls Around 1.1660 While CPI and Powell Shock Set Up the Next Break

EUR/USD price: compressed between 1.16–1.17 with crowded euro longs and CPI risk

Macro backdrop for EUR/USD around 1.1660–1.1670

EUR/USD is trading roughly in the 1.1660–1.1670 band, locked inside a tight compression zone where macro data, US politics and stretched positioning all collide. The pair has repeatedly defended supports between 1.1612–1.1620, while every attempt to extend higher is capped beneath a dense resistance shelf running from roughly 1.1686 up to 1.1748. This is not neutral noise; it is a pressure area where the next decisive break can easily extend 150–200 pips once one side loses control.

US CPI, Fed cut expectations and their impact on EUR/USD

The US Dollar Index (DXY), heavily driven by the euro, is stabilizing just above 99.00 after a long decline, while the market still prices about two Fed cuts in 2026, starting around mid-year. The immediate catalyst is US CPI: consensus looks for 0.3% m/m in December, with headline and core both near 2.7% y/y. A hotter print than 2.7% would argue for delayed or fewer cuts, support US yields and typically pull EUR/USD lower from the current 1.16–1.17 range. A softer print would weaken that argument, but given how crowded euro longs already are, upside may still struggle unless the surprise is meaningful.

Fed independence shock, political risk and US dollar safe-haven flows

The criminal inquiry into Fed Chair Jerome Powell’s prior testimony over building renovations has injected a different kind of risk. On paper, questioning Fed independence is negative for the structural status of the USD as a reserve currency. In practice, in the short term, institutional stress has triggered haven demand into the dollar, because deep liquidity still dominates long-term concerns. That is why DXY can firm near 99 even with expected cuts on the horizon and why EUR/USD is struggling to break cleanly above 1.17 despite the prior dollar downtrend. As long as this legal cloud hangs over the Fed, any flare-up in the story tends to cap euro rallies and keep the dollar bid on stress days.

Geopolitics, Iran risk and volatility premium inside EUR/USD

Tensions around Iran keep the volatility premium elevated. Trump’s comments that Iran’s leaders want to “negotiate,” combined with his warning that “we may have to act before a meeting,” underline how quickly the situation can escalate. Each step toward military or tariff escalation pushes global investors toward USD liquidity and Treasuries, which typically weighs on EUR/USD. Even if Europe does not sit at the center of this conflict, the euro is still a risk-sensitive currency relative to the dollar. That mix of geopolitical uncertainty and US political noise is part of why the pair is trapped rather than trending.

Eurozone weakness and the stalled bullish leg in EUR/USD

On the European side, the issue is straightforward: the region’s growth profile is soft, and the prior bull leg in EUR/USD has effectively stalled for more than six months. The medium-term chart still shows a chain of higher lows from roughly 1.1550, but every push into the 1.1686–1.1748 Fibonacci band has attracted sellers. That zone has become a credibility test for euro bulls. Without a clear upside break through 1.1745–1.1750, the market will keep treating this band as distribution territory, especially while the macro narrative is not clearly shifting in Europe’s favor.

CFTC positioning: record euro longs and crowded EUR/USD exposure

Futures data confirm how crowded the EUR trade is. Large speculators now hold the most net-long euro exposure in roughly 18 months, while asset managers sit near 15-month highs in net-long EUR. More importantly, gross long positions in both groups are at or near record levels. That matters: when gross longs are maxed out, additional upside needs genuinely new bullish information, not just momentum. It also creates a clear risk: if EUR/USD fails again near or just above 1.17, the path of least resistance becomes a position-clearing pullback rather than a clean extension higher.

Dollar futures, DXY net shorts and the turning point for the USD leg

At the dollar index level, large speculators remain net-short DXY, but that short has already been cut by roughly three-quarters in recent weeks to around -38k contracts. Asset managers have also flipped to net-short USD index futures. That means the heavy anti-dollar positioning phase is already behind us; the imbalance is shrinking rather than expanding. For EUR/USD, that means the easy trade—long euro against a clearly weak USD—is gone. From here, the dollar does not need much positive surprise to trigger a squeeze, while the euro is vulnerable precisely because it is so heavily owned.

Short-term levels: support at 1.1612–1.1620 and resistance at 1.1686–1.1748

The immediate EUR/USD technical map lines up with this positioning risk. On the downside, buyers have defended a support band formed by old swing highs and lows between 1.1612 and 1.1620, with a further foothold at 1.1585 and a broader base near 1.1550. On the topside, multiple technical layers are stacked tightly above spot:
The 100-day moving average is clustered just under price, roughly 1.1663–1.1664, and has become the near-term line in the sand for bulls.
The 100-hour moving average around 1.1668 and the 50-EMA near 1.1695 form a narrow band that frequently flips between support and resistance.
Above that, the 200-hour moving average near 1.1697–1.1700 defines the upper edge of the short-term range, with 1.1686–1.1745 as the broader resistance shelf that has capped the pair for months.
Earlier, buyers managed to break above the 100-day and 100-hour averages after defending 1.1620, but the rally stalled a few pips shy of the 200-hour, and subsequent dollar strength dragged the pair back toward that moving-average cluster. That pattern—break, fail near the top of the range, then rotate back—fits a market that is coiling, not trending.

Four-hour structure, RSI signals and compression in EUR/USD

On the four-hour chart around 1.1660–1.1670, candles are small, with mixed wicks, and the RSI hovers in the mid-40s. That combination points to fading bullish momentum without a full handover to the bears. It is a classic pre-event compression pattern. The market is waiting for a trigger: CPI, a new Powell headline, a sharp move in US yields or a new geopolitical shock. Once that trigger arrives, the clustering of moving averages and the stacked positioning will amplify the move; the direction will depend on whether the shock is dollar-positive or dollar-negative.

Scenario map: upside break versus downside release

If EUR/USD can clear and hold above roughly 1.1745–1.1750 on a daily close, shorts will be forced to cover into a thin air pocket, opening the path toward last year’s highs and shifting the narrative to a renewed euro up-leg. Given current data and positioning, that requires a combination of softer-than-expected US inflation, firming European data and a reduction in Fed-independence stress—all at once. The probability is not zero, but the bar is high. The downside scenario is more straightforward. A hotter CPI print or any event that forces the market to push back the timing and magnitude of Fed cuts would immediately support the dollar. In that case, repeated failures near 1.1686–1.1700 become the trigger for long liquidation. A daily close below 1.1610 would confirm that dip-buyers have stepped aside and shift the focus to 1.1585, then 1.1550, as the next downside magnets.

Trading stance on EUR/USD: verdict Sell / tactically bearish

Putting macro, positioning and price together, the balance of risk at 1.1660–1.1700 is skewed to the downside for EUR/USD. The euro is crowded to the long side, the dollar is no longer one-way weak and is stabilizing near DXY 99, CPI risk is asymmetric in favor of a stronger USD if inflation surprises higher, and Fed-independence and Iran-related headlines keep a haven bid under the dollar on stress days. From a trading perspective, the cleaner expression is to fade strength into the 1.1695–1.1745 area, with a tactically bearish stance while EUR/USD holds below roughly 1.1750. On the downside, the first realistic objective is a retest of 1.1620, followed by 1.1585, with the more extended target near 1.1550 if CPI, Fed communication and positioning all break in the dollar’s favor. In this setup, EUR/USD at current levels is a Sell, not a Buy or a passive Hold.

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