EUR/USD Price Forecast: EUR/USD Holds Near 1.18 As Dollar Slumps On 4.3% US GDP And 2026 Fed-Cut Bets
Macro backdrop: 4.3% US GDP and a softer USD still push EUR/USD toward 1.1800
EUR/USD is trading around 1.1790–1.1800 after briefly printing a three-month high at 1.1808. The move comes despite a strong 4.3% annualized US GDP print for Q3, up from roughly 3.8%, which under normal circumstances should have supported the USD. Instead, the bounce in the dollar was short-lived as the market focused on the composition of growth and the policy path rather than the headline number. A large part of the expansion is tied to sectors like healthcare and inventory adjustments, not a broad re-acceleration in private investment or productivity, so the data failed to reverse the medium-term bearish trend in the dollar.
Fed expectations: at least two 2026 cuts keep the USD on the defensive and support EUR/USD
Futures markets are pricing at least two Fed cuts in 2026 even with GDP at 4.3%, because inflation is cooling and the labor market is losing momentum at the margin. Weekly data and confidence indicators point to slower hiring and softer consumer sentiment into year-end, which caps real yields and keeps the USD under pressure. The US Dollar Index is trading around 97.9 within a clear descending channel, capped by the 50-EMA near 98.5 and the 100-EMA around 99.1, with support at 97.75, 97.35 and 97.00. That structure is weak enough to let EUR/USD stay bid toward 1.18–1.19 as long as the Fed-cut narrative remains intact.
Policy noise and thin liquidity: why EUR/USD trades heavy on the upside but refuses to break down
Comments from US President Donald Trump that a future Fed chair should be willing to lower rates even if growth remains solid add political noise around the central bank’s independence. That uncertainty reinforces the bearish bias in the USD into 2026, especially in a week where market liquidity is thinned by Christmas holidays. With fewer participants and lighter order books, moves in EUR/USD above 1.18 can extend quickly, but pullbacks can also be abrupt. The result is a pair that grinds higher in a rising channel but struggles to clear resistance decisively at 1.1800–1.1808 on the first attempt.
Price action: EUR/USD trades in a rising channel, holding gains above 1.1750
On the daily chart, EUR/USD is advancing within an ascending channel that started in late November. Price is holding above the nine-day EMA near 1.1745 and the 50-day EMA around 1.1660, with the shorter average already trading above the longer one. That configuration confirms a constructive trend and suggests that dips toward 1.1750–1.1740 are being treated as buying opportunities rather than the start of a reversal. On the 4-hour chart, the pair is also supported above the 50-EMA near 1.1750 and the 100-EMA around 1.1670, reinforcing this bullish short-term structure.
Momentum signals: overbought daily EUR/USD but still only mid-range on intraday charts
Daily momentum for EUR/USD is stretched: the 14-day RSI sits around 71, formally in overbought territory. That typically argues for consolidation or a shallow correction before the trend resumes. At the same time, intraday readings are more modest, with RSI on shorter time frames hovering around 58–60, which indicates steady buying interest without a blow-off top. The combination usually points to sideways or mildly corrective trading between roughly 1.1740 and 1.1810 rather than an immediate reversal back toward 1.16.
Key resistance levels: 1.1808, 1.1850, 1.1880 and 1.1918 cap EUR/USD upside in the short term
On the topside, the nearest barrier is the psychological 1.1800 handle and the recent three-month high at 1.1808. A clear daily close above 1.1808 would open 1.1850 on intraday maps, then the upper edge of the rising channel near 1.1880. Above that, the next historical reference is 1.1918, the highest level since June 2021. That 1.1880–1.1918 band is where profit-taking is likely to accelerate, as it marks both the channel cap and a major prior high. As long as EUR/USD stays below 1.1918, the move can still be described as a medium-term retracement within a broader multi-year range rather than the start of a secular euro bull market.
Support zones: 1.1760–1.1740 first line for EUR/USD, with 1.1660 and 1.1589 as deeper downside markers
On the downside, EUR/USD has a first support cluster around 1.1760–1.1745, where the nine-day EMA, the 50-day moving average from some models and the lower boundary of the daily channel all converge. A break below 1.1740 would not instantly end the uptrend but would signal that the pair is moving into a deeper correction phase, exposing 1.1727 and then 1.1660 at the 50-day EMA mentioned in several technical reads. A more aggressive flush could test 1.1589, the three-week low recorded on December 1. Only a daily close below roughly 1.1660–1.1589 would seriously challenge the current bullish structure and shift the conversation from “buy dips” to “reduce longs.”
Rate-differential story: why EUR/USD stays supported even with US GDP at 4.3%
The core of the EUR/USD story is not growth; it is real rates and relative policy. The US economy printing 4.3% annualized growth should, in theory, lift the USD, but markets are forward-looking. With traders already assuming two Fed cuts in 2026, US real yields out the curve are no longer marching higher. In contrast, the ECB is perceived as more cautious on aggressive easing given still-sticky services inflation in the Eurozone. That relative stance compresses the rate gap in favor of the EUR, explaining why the pair can trade near 1.18 even as US macro data look solid on the surface.
Holiday trading and positioning: EUR/USD driven more by expectations than data surprises
Because this is a holiday-shortened week, many macro and quant desks have already reduced risk, which limits the depth of order books. In this environment, EUR/USD is moving less on incremental data—such as the already-released 4.3% US GDP revision—and more on positioning shifts and forward expectations for the Fed and ECB. With the US Dollar Index trending lower and speculative accounts long EUR/USD inside a rising channel, the baseline is for dip-buying on setbacks into the mid-1.17s rather than aggressive selling unless a shock data point or policy surprise hits.
Trading stance on EUR/USD: bias remains bullish; buy-the-dip favored over chasing breakouts
Given the combination of a weak USD (DXY around 97.9 in a descending channel), a structurally constructive chart for EUR/USD (higher highs and higher lows above 1.1750), and still-moderate intraday momentum, the evidence leans bullish rather than neutral. The overbought daily RSI argues against chasing fresh longs above 1.1800–1.1810 on a thin holiday tape, but it does not yet justify calling a major top while price holds above the 1.1740–1.1750 floor.
Verdict on EUR/USD: BULLISH BIAS – effectively a BUY on dips while 1.1700–1.1660 holds
Based on the current setup, EUR/USD is a BUY/overweight on pullbacks, not a sell. The preferred strategy is to accumulate near 1.1750–1.1740 with a medium-term upside window toward 1.1850, 1.1880 and potentially 1.1918, as long as the pair holds above roughly 1.1700–1.1660 on daily closes. A sustained break below that band would downgrade the stance to neutral. As of now, with EUR/USD trading just under 1.1800, the structure, the macro backdrop and the behavior of the USD all argue that dips remain more attractive than shorts.
That's TradingNEWS
