EUR/USD Price Forecast: Bulls Drive Toward 1.2000 as Dollar Momentum Fades

EUR/USD Price Forecast – Bulls press 1.1900 as dollar momentum fades

EUR/USD – current structure around 1.1900 and why the upside bias is intact

EUR/USD is trading roughly in the 1.1860–1.1910 band after breaking back above 1.18 and printing one-week highs. That move is not a random short squeeze. It is built on broad US Dollar weakness, improving Euro-area sentiment, and a clean bullish structure on both the daily and intraday charts. On the daily view, spot holds comfortably above a cluster of moving averages, with the 21-day SMA near 1.1780 now sitting on top of the 50- and 100-day SMAs and all three lines sloping higher. That configuration is classic positive alignment and turns the 1.1760–1.1800 region into the first major demand zone.

Price broke out of a multi-month consolidation in late January, then came back to retest the former ceiling in the 1.1760–1.1780 band and bounced. That flip from resistance to support is critical. As long as EUR/USD holds above that area, the base case is a grind higher toward the 1.1900 psychological mark, then into the 1.1995–1.2082 band where the late-January highs sit. The near-term picture is driven by this stair-step pattern: higher highs toward 1.2050 followed by controlled pullbacks that stall ahead of previous lows, with buyers re-appearing every time price dips toward the mid-1.17s.

EUR/USD – dollar side: DXY heavy below 98.00 and pinned near 97.20–97.60

On the USD side, conditions are soft rather than catastrophic. The US Dollar Index trades in the 97.3–97.6 zone after failing near 97.95–98.00, where the upper boundary of a short-term rising channel and the 61.8% retracement cluster. Recent candles on the 2-hour chart show broad red bodies with modest lower wicks, signaling steady supply rather than a panic flush. Price has dropped below the 50-EMA while the 200-EMA is still higher around 98.60, which leaves the index capped under its short-term trend filter.

The key pivot is 97.20. That level has acted repeatedly as a decision point: above it, the dollar can stabilize and attempt a bounce; below it, the path opens toward 96.83 and then 96.34. The dollar is currently hovering just above that midpoint, and each failure to reclaim 97.60–97.95 keeps the pressure on. With the DXY stuck beneath both resistance and the fast EMA, any renewed push lower toward 97.20 naturally supports EUR/USD, given the heavy weight of the euro in the basket.

Macro context explains why the dollar feels heavy. The January US labour report is expected to show roughly 70,000 new positions with unemployment near 4.4%, a profile that does not justify aggressive tightening but also does not signal a hard downturn. At the same time, the Michigan consumer sentiment index has climbed to 57.3, a six-month high, confirming households are not collapsing into pessimism. That mix—an economy growing slowly, with resilience but no strong upside surprise—locks the Federal Reserve into a cautious stance and keeps the dollar trapped between elevated yields and rising expectations of eventual cuts.

EUR/USD – Euro side: sentiment finally positive and ECB less dovish than the Fed curve

The EUR leg has quietly improved. Euro-area Sentix investor sentiment for February jumped from −1.8 to +4.2, the first positive reading since July and far above the expected −0.2. That shift marks a transition away from recession-type pessimism and signals that activity is stabilising. Combined with the European Central Bank’s steady, data-dependent stance at its early-February meeting, the euro benefits from a narrower perceived policy gap versus the US.

The ECB is not racing to cut. While pricing still reflects eventual easing, the central bank has pushed back against the idea of a rapid, front-loaded cycle. That leaves EUR supported by a rates backdrop in which the Federal Reserve is seen as more likely to lead on cuts once inflation allows. When the market leans toward faster easing in the US than in the eurozone, the relative carry moves in favour of EUR/USD, especially when risk sentiment is not collapsing and there is no rush into the dollar’s safe-haven status.

This is visible in the way dips are treated. Each slide toward 1.1760–1.1780 has drawn firm demand, consistent with accounts reallocating toward the euro on setbacks rather than using strength to sell.

EUR/USD – technical map from intraday charts to daily SMAs

Technically, EUR/USD presents a coherent bullish picture across timeframes. On the daily chart, the 21-day SMA has crossed above the 50- and 100-day SMAs, with all of them pointing higher. The 21-day average around 1.1780 forms the first line of dynamic support, while the 100-day SMA near 1.1678 acts as deeper structural backing. Price has moved out of a multi-month consolidation range and successfully retested its upper boundary, confirming that the breakout is holding.

On the 4-hour and 2-hour charts, price has pulled back from the 1.2050 area but remained above both the rising trendline from mid-January and a horizontal demand band around 1.1760–1.1780. The 50-EMA has been reclaimed, while the 200-EMA on the 2-hour chart sits lower near 1.1750, reinforcing that short-term momentum has turned back up inside an already positive medium-term structure. Short-term resistance now sits first at 1.1895–1.1910, roughly today’s high region, then at 1.1985, where sellers previously capped advances just under the 1.2000 psychological round number.

Momentum indicators reinforce the constructive stance. Daily RSI holds around 60, comfortably in bullish territory but still below overbought thresholds, which leaves room for further appreciation without triggering classic reversal signals. On the trend side, ADX near the low 30s indicates that the underlying uptrend is not only present but strengthening. On intraday frames, RSI on the 4-hour chart remains above 50, confirming that buyers are defending pullbacks rather than losing control of the tape.

EUR/USD – rates, Fed timing and policy divergence as the core driver

Fundamentally, EUR/USD remains a story of relative rates. The pair trades where expectations for US and European policy intersect, and right now that intersection supports higher levels. In early 2026, attention is centred on when the Federal Reserve will begin cutting. Mixed labour and inflation readings, along with the lingering effects of the partial government shutdown on data timing, make the path blurrier than usual. The curve is still pricing a small probability of a March move, somewhere in the mid-teens, but markets assign roughly a 70% chance to a rate cut by June.

At the same time, Fed officials are sending careful signals. The policy rate is likely to remain unchanged at the March meeting, with commentary acknowledging slow but positive growth, soft job creation and persistent inflation risk. That combination limits the upside for the dollar: emergency easing is not on the table, but the next shift in the cycle still points toward lower rates rather than another hike.

Across the Atlantic, the ECB has held rates steady and stressed a data-driven approach, resisting pressure to pre-commit to early cuts. As long as European policy looks less inclined to ease than US policy, the yield differential can compress in EUR’s favour. With the dollar already rotating off its highs and the DXY unable to break through 98.00, the rate-spread channel argues for EUR/USD trading closer to 1.20 than to 1.15 in the coming weeks, barring a sudden shock in US data.

EUR/USD – trading conditions, liquidity windows and tactical zones

From a microstructure angle, EUR/USD remains one of the cleanest venues to express a macro view, with tight spreads and deep liquidity. The pair’s character has not changed: the most active window is still the London–New York overlap, roughly 13:00–16:00 GMT, where price ranges expand and order flow thickens. That period tends to offer the clearest technical levels, as intraday highs and lows are often printed near major data releases or during this overlap phase.

The late Asian session, around 21:00–23:00 GMT, remains the least rewarding for shorter-term positioning. Price often drifts in narrow ranges, spreads feel wider relative to volatility, and range-bound noise can chew through accounts that press for action when the market is not moving. Aligning exposure with the active windows strengthens the edge implied by the underlying bullish structure, especially when entering around clearly defined support zones.

Tactically, the market has respected a few key bands. On the downside, 1.1760–1.1780 is the primary demand area, backed by the rising daily 21-SMA and the intraday trendline. A secondary, deeper support sits around 1.1678–1.1700, where the 100-day SMA and former range highs intersect. On the upside, 1.1895–1.1910 is the immediate cap. A sustained close above that band opens space to test 1.1985 and then the 1.2000–1.2082 region, which corresponds to the January peaks.

EUR/USD – risk factors, data calendar and when the bullish script breaks

The constructive view on EUR/USD is not without risk. The dollar still benefits from its safe-haven profile whenever global stress flares. Renewed trade headlines, geopolitical shocks, or a sudden repricing of US rate expectations could all trigger sharp reversals. The upcoming US data slate is dense: retail sales, the delayed January nonfarm payrolls, and CPI all carry the potential to shift the narrative.

A strong upside surprise in jobs or inflation, accompanied by hawkish rhetoric from key Fed officials, would lift the DXY back toward 97.95–98.60 and could drag EUR/USD back under 1.1835 and down into the 1.1760 band. If that demand zone fails decisively and daily closes begin to print below 1.1760–1.1780, the bullish map breaks. In that scenario, the focus would flip to the 1.1678 area and the 100-day SMA as the next line of defence.

On the European side, the main vulnerabilities are political and growth-related. If confidence indicators such as the Sentix index reverse sharply back into negative territory or if hard data fail to confirm the tentative recovery, EUR support could erode. Similarly, any signal that the ECB is preparing a more aggressive easing cycle than currently anticipated would compress the euro’s rate advantage and undermine the uptrend. For now, none of these risks are dominant, but they frame the conditions that would be needed to turn the current upside bias into a more neutral or negative stance.

EUR/USD – directional stance: bias to the upside with 1.1770 as the line in the sand

Pulling it together, EUR/USD is trading with a clear upward bias. The pair holds above all key moving averages, sentiment in the euro area is the strongest in months, and the dollar index sits beneath a heavy resistance band with pivotal support just below current levels. Technicals point to a market that has broken out of a range, retested the breakout zone, and is now attempting to extend higher, with daily momentum and trend indicators aligned in favour of further gains.

The working framework is straightforward. As long as EUR/USD stays above roughly 1.1770 on a closing basis, dips toward 1.1820–1.1860 look like opportunities to position for further upside toward 1.1900, 1.1985 and eventually the 1.2000–1.2082 region. A sustained break below 1.1760–1.1780 would invalidate that view and shift the focus to a deeper correction closer to 1.17 or even the mid-1.16s, where the broader uptrend would come under review.

Given the current configuration—DXY heavy below 98.00, euro sentiment breaking higher, and EUR/USD holding a series of higher lows—the stance is bullish with a preference for buying weakness rather than chasing strength, and with 1.1770 marked as the key line that separates a healthy uptrend from a more complex correction.

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