EUR/USD: Bulls Defend 1.1700 As Dollar Softens After 2.7% US CPI Shock
EUR/USD Holds Around 1.1710–1.1720 In A Bullish Channel
EUR/USD is trading around 1.1710–1.1720 after four straight red daily sessions, but the pair is still holding most of a roughly 2% three-week rally and remains inside a clear ascending structure. Price has pulled back from this week’s three-month high at 1.1804 and is now testing clustered support near 1.1700, not breaking the trend. The market is treating this as consolidation after an extension, not as a reversal.
Daily Chart: Rising Averages And RSI Keep The Uptrend Intact
On the daily chart, EUR/USD remains decisively above all key moving averages. Price is trading over the nine-day EMA near 1.1713, above the 15-day moving average around 1.1687, the 20-day at 1.1659, and the 50-day EMA near 1.1644. All of them slope higher, confirming a sequence of higher lows and persistent demand on pullbacks. The 14-day RSI sits in the low 60s (around 61–62), signalling firm bullish momentum without overbought conditions. Structurally, this is a classic trending market pausing just below resistance, not topping out.
Short-Term Structure: Four-Hour Channel And Cooling Momentum
On the four-hour chart, EUR/USD is consolidating within a rising channel, trading near 1.1714–1.1717 and hovering around the 4H 50-EMA, while the 100-EMA between roughly 1.1647 and 1.1680 continues to slope higher. Recent candles show overlapping bodies and upper wicks, which reflect fading upside momentum rather than aggressive selling. Four-hour RSI has slipped toward about 45, and MACD is below zero with red bars, consistent with a corrective phase inside an uptrend rather than a breakdown.
Upside Map For EUR/USD: 1.1750–1.1760, Then 1.1804, 1.1820, 1.1850 And 1.1918
Above spot, the resistance ladder is well defined. Initial resistance sits at 1.1750–1.1760, with 1.1750 as a short-term breakout trigger and 1.1760 marking a recent swing high. Beyond that, bulls are targeting the two-month high at 1.1804 and the 1.1820 band, which lines up with earlier September peaks. If EUR/USD can post a daily close above 1.1820, the upper edge of the daily ascending channel around 1.1850 comes into view, followed by psychological and technical magnets at 1.1900 and then 1.1918, the highest level since June 2021. Momentum accounts will be trading that exact sequence.
Downside Map For EUR/USD: 1.1700–1.1680 As First Defense, Then 1.1659, 1.1644 And 1.1615
On the downside, the first defence zone is where the pair is currently camped. The nine-day EMA at 1.1713, the December 17 low at 1.1703 and the round 1.1700 handle all sit on top of short-term trendline support. A clean break below 1.1700 turns focus toward the 1.1687/1.1685 region, where the 15-day average and prior swing levels from December 11 and December 4 converge. Below that, the 1.1659–1.1650 band (20-day average and former resistance) and the 1.1645–1.1644 pocket (50-day EMA and 4H structure) form the real line in the sand. Losing 1.1640 on a daily close opens 1.1615 and, on further weakness, the broader 1.1550 zone as a deeper correction target.
US CPI At 2.7% And Core At 2.6%: Disinflation Narrative Caps USD Upside
The latest US CPI release is the main reason the dollar leg of EUR/USD looks heavy. Headline inflation slowed to 2.7% year-on-year compared with a 3.1% consensus and 3.0% previously, while core CPI cooled to 2.6% from 3.0%. That reinforced a disinflation story and pushed traders away from aggressive “higher-for-longer” expectations. The immediate impact was a weaker dollar and softer real yields, which mechanically support EUR/USD as rate-differential pressure fades.
DXY Below 99: Dollar Index Stuck In A Descending Channel
The US Dollar Index (DXY) is trading near 98.6, locked inside a descending channel on the four-hour chart. Price is capped below the 50-EMA around 98.96 and the 100-EMA near 99.28, and the channel midline is still acting as resistance. Immediate supports sit at 98.17 and then 97.87 near the lower boundary. RSI has recovered toward roughly 55, but that is not enough to flip the structure bullish. As long as DXY stays below 99.00 and under its key EMAs, the broader skew remains against the dollar and indirectly supportive for EUR/USD.
US Macro Mix: 224K Jobless Claims, -10.2 Philly Fed And Focus On Housing And Sentiment
Broader US macro data add nuance without overturning the dollar-negative bias. Initial jobless claims printed at 224K, matching expectations and improving on the prior 237K, which means no sudden labour-market collapse. At the same time, the Philadelphia Fed Manufacturing Index plunged to -10.2 from a 2.5 forecast, flagging real softness in regional manufacturing. Markets now watch existing home sales, projected at 4.15 million versus 4.10 million prior, and final Michigan Consumer Sentiment at 53.4 versus 53.3, as barometers for demand and confidence. Unless those numbers surprise significantly to the upside, they are more likely to reinforce the softer-dollar narrative than reverse it.
ECB At 2.0% Deposit Rate: Optionality And Upgraded 2025–2026 Growth Projections
On the European side of EUR/USD, the ECB is leaning on stability and optionality. The rate on the deposit facility is unchanged at 2.0%, and the latest decision was unanimous. President Lagarde explicitly refused to pre-commit to any rate path and repeated that all options remain open. Growth forecasts, however, were revised higher to 1.4% for 2025 and 1.2% for 2026. That mix – a modestly better growth profile, a 2.0% floor under rates, and no aggressive easing guidance – helps prevent the euro from trading as a funding currency, especially when markets see the Fed cutting at least twice in 2026.
Eurozone Data: German GfK At -26.9 And PPI At -2.3% Limit EUR Aggressiveness
Domestic Eurozone data still cap how far the euro can run. Germany’s GfK Consumer Confidence index dropped to -26.9 from -23.4, missing expectations of -23.2 and underlining how weak household sentiment remains. German producer prices were flat on the month after a 0.1% rise, but they fell 2.3% year-on-year, weaker than both the prior -1.8% and the -2.2% consensus. Later in the day, Eurozone consumer confidence is expected at -14.0 versus -14.2, an improvement but still deeply negative. This entrenched weakness in German demand and producer prices counterbalances the upgraded growth forecasts and prevents the euro side of EUR/USD from driving the pair much higher on its own.
FX Heat Maps: Euro Soft Versus USD But Stronger Versus JPY
Currency-performance tables reflect a nuanced picture rather than a one-way euro selloff. In one daily snapshot, the euro was slightly weaker against the USD (around -0.08%) and roughly flat versus GBP, CAD, AUD, NZD and CHF, with changes mostly between -0.05% and +0.22%. In another cross-section, EUR was the strongest currency against the JPY, up about 0.38%, even as it traded marginally negative versus the dollar. This tells you investors are trimming EUR/USD near 1.18 after a run, not liquidating euro exposure across the board.
Positioning And Sentiment: Institutions Lean Long EUR While Retail Turns Gradually Bullish
Positioning and sentiment are aligned with the price action. Institutional accounts continue to show a preference for euro exposure, with steady demand for upside EUR/USD structures in options markets. Retail flow is more mixed but is gradually rotating toward the long side as price holds comfortably above 1.16–1.17. Four consecutive red daily candles after touching 1.1804 are being read as a pause to digest gains rather than as a topping pattern, as long as the pair continues to hold the 1.1680–1.1650 support band on a closing basis.
Trading Playbook: Buy-The-Dip Bias While 1.1650–1.1640 Holds
From a trading perspective, the current configuration argues for a buy-the-dip stance in EUR/USD. A rational blueprint from the data you have is to look for long entries near 1.1680, which coincides with the lower part of the rising channel and nearby moving averages, and to add exposure if price extends into the 1.1659–1.1650 zone. A protective stop just below 1.1640–1.1615 marks the point at which the daily bullish structure is clearly violated. On the upside, initial profit zones sit at 1.1750 and 1.1760, with follow-through potential toward 1.1800–1.1804 and, on stronger momentum, into the 1.1850–1.1918 region.
Bearish Alternative: Break Below 1.1640–1.1615 Opens Room Toward 1.1550
The bearish alternative scenario is straightforward. If EUR/USD fails to defend 1.1700, breaks decisively below the 1.1687–1.1685 cluster, and then closes under the 1.1659/1.1650 shelf and the 1.1644–1.1645 50-day EMA pocket, the uptrend thesis weakens materially. A confirmed move below 1.1640 would shift attention to 1.1615 and then to the broader 1.1550 area, signalling a deeper correction rather than a shallow consolidation. The risk of this path increases if DXY simultaneously reclaims 99.00 and trades sustained above its 50- and 100-EMAs.
Verdict On EUR/USD: Buy Dips, Bullish Bias Above 1.1650, Hold If 1.1640 Breaks
Putting the full set of numbers together – EUR/USD hovering near 1.1710–1.1720, support layered between 1.1700 and 1.1650, US CPI at 2.7% and core at 2.6%, DXY stuck below 99, the ECB anchored at a 2.0% deposit rate with growth at 1.4% and 1.2%, and German confidence at -26.9 with PPI at -2.3% – the bias remains bullish as long as 1.1650–1.1640 holds. On this dataset, EUR/USD is a buy-the-dip candidate with upside toward 1.1760–1.1804 and potentially 1.1850–1.1918, while a clean daily break below 1.1640–1.1615 would downgrade the pair to hold and open a move toward the 1.1550 area.
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