EUR/USD Price Forecast - Euro to Dollar Up 1.17 as Fed’s Third Rate Cut Knocks Dollar Index

EUR/USD Pushes Toward $1.18 As Fed Cuts Rates And Dollar Weakens

Fed’s Split Decision Sends USD Lower And EUR/USD Above $1.17

EUR/USD is trading around $1.1720, up nearly 0.8% in two sessions, after the Federal Reserve’s third consecutive 25 bps rate cut pulled the US Dollar lower. The Fed reduced the funds range to 3.50%–3.75%, its lowest in three years, through a rare 9–3 vote split — two members opposed any cut, while one sought a 50 bps move. Despite the internal division, the Dollar Index (DXY) extended its decline toward $98.50, pressured by a dovish tone and weaker yields. The Fed also announced a $40 billion monthly Treasury buyback, surprising markets with extra liquidity support that further weakened the USD and pushed EUR/USD toward a three-week high.

ECB Stability Adds To Euro Strength

The European Central Bank (ECB) continues to hold firm. President Christine Lagarde repeated that Eurozone policy is “in good shape,” hinting at potential upward revisions to growth forecasts — a clear divergence from the Fed’s easing cycle. As the Fed’s stance softens and the ECB remains steady, rate differentials are tightening in favor of the Euro. Traders now see less downside risk for EUR and expect the pair to stay supported above $1.1650. The contrast between a Fed pausing near 3.6% and an ECB signaling no cuts is driving capital flows toward European assets, helping EUR/USD stay resilient near $1.17–$1.1730.

Technical Picture Turns Bullish As Key Resistance Breaks

On the daily chart, EUR/USD broke through resistance at $1.1680, confirming a short-term bullish breakout. The pair trades inside a rising channel established since mid-November, with the 20-day EMA and 200-day EMA both sloping upward. The RSI sits at 61, showing strong momentum but not yet overbought, leaving room for another leg higher. The MACD histogram is green on both 4-hour and daily timeframes, signaling continued strength.
Immediate resistance levels lie at $1.1730, $1.1760–$1.1780, and $1.1800, while supports rest at $1.1680, $1.1620, and $1.1570–$1.1490. As long as EUR/USD holds above $1.1620, technical structure favors the bulls with a target at $1.1800–$1.1880.

Jobless Claims Data Becomes Critical For USD Outlook

Markets are focused on US Initial Jobless Claims, projected at 220,000 versus the prior 191,000, with the 4-week average at 214,750. A softer labor print could confirm that the Fed is lagging behind a slowing economy, reinforcing Dollar weakness and pushing EUR/USD above $1.1730 toward $1.1780. However, if jobless data stays firm near 190,000, the USD could briefly recover, sending EUR/USD back to $1.1650–$1.1620. Traders are watching this data closely to assess whether the Fed’s rate-cut path will accelerate in early 2026 or stall.

Fed Liquidity Boost And Political Risks Pressure USD

Beyond rate policy, the Fed’s $40B Treasury repurchase plan adds liquidity while maintaining a cautious tone. This quasi-QE measure aligns with Powell’s “wait and see” strategy but weakens the Dollar’s carry appeal. Meanwhile, speculation grows about leadership changes at the Fed, with markets pricing the possibility of Kevin Hassett replacing Powell in May. Hassett is viewed as more dovish, which could extend the USD decline into the first half of 2026. The resulting policy gap between the Fed and ECB continues to benefit EUR/USD, which now trades nearly 2.1% higher month-to-date.

Euro Benefits From Broader Risk Sentiment Recovery

Despite volatility in tech stocks after Oracle’s sharp drop, risk sentiment in Europe has stabilized. European equities turned positive, while US futures remain slightly negative. This partial rebound supports EUR/USD, as the Euro gains both from improving local sentiment and a weaker Dollar. As long as risk aversion doesn’t escalate into a global selloff, EUR/USD should maintain its bullish bias toward $1.18.

Short-Term Outlook: Controlled Uptrend Toward $1.18–$1.19

Buyers are accumulating between $1.1620 and $1.1570, where demand has repeatedly emerged. If the pair sustains closes above $1.1730, technical models project a continuation toward $1.1800–$1.1880. Only a drop below $1.1570 would shift momentum back to neutral. For now, all indicators — rate differentials, technical structure, and sentiment — align in favor of continued Euro strength.
Verdict: EUR/USD — Buy Bias Above $1.1620, Target $1.1800–$1.1880.

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