EUR/USD Price Forecast: Can 1.17 Survive the CPI and ECB Double Test?

EUR/USD Price Today: Can 1.17 Hold as the Dollar Fights Back and the ECB Stays on Hold?

EUR/USD Holds Above 1.17 as Bulls Defend the Uptrend into ECB and CPI

EUR/USD is trading around 1.1720–1.1730 on December 17, pulling back from the 1.1780 spike at the end of last week but still holding a clearly constructive structure. The pair is down roughly 0.2–0.3% on the day after touching a 12-week high above 1.1780, yet it remains above the key 1.1700 handle and well above the medium-term base between 1.1639 and 1.1611. That band – the 20-day average / middle Bollinger band near 1.1639 and the 100-day EMA around 1.1611 – is the real line in the sand for euro bulls. As long as EUR/USD trades above that zone, the recent pullback looks like consolidation after a sharp run, not a trend reversal. Short-term, the pair is still sitting on the 50-EMA around 1.1705–1.1720, with price leaning toward the upper side of the recent range rather than the bottom.

US Dollar Index Stabilizes Around 98.40–98.54 While Growth and Inflation Cool

The U.S. Dollar Index (DXY) is trading near 98.40–98.54, stabilizing after a heavy drop that has left the dollar down close to 9.5% year-to-date, on track for its sharpest annual decline since 2017. The fundamental tape is mixed: Non-Farm Payrolls rose 64K versus roughly 50K expected, but unemployment climbed to 4.6% and average hourly earnings increased only 0.1% m/m, signaling cooling wage pressure. Retail sales were flat and PMIs eased, with manufacturing around 51.8 and services near 52.9, both softer than prior readings. The result is a “slowing but not collapsing” growth profile – enough to keep the dollar from imploding further, but not strong enough to re-establish a structural bullish trend. For EUR/USD, that means dips are being cushioned by a softer medium-term dollar backdrop even as short-term demand for the greenback occasionally pushes the pair off the highs.

ECB Seen Holding the Deposit Rate at 2% as Eurozone Data Stay Soft but Not Disastrous

On the euro side, expectations for Thursday’s ECB decision are extremely clear: the market is pricing a hold with the deposit rate locked at 2%, where it has been since July. Eurozone data are not strong enough to justify a tightening restart and not weak enough to force an urgent easing pivot. Final Eurozone CPI sits around 2.1% y/y with core CPI near 2.4%, essentially hovering just above target, while growth indicators stay sluggish – highlighted by German Ifo Business Climate slipping to about 87.6 versus 88.2 expected. That keeps the ECB in fully data-dependent mode. For EUR/USD, this “low drama” stance limits deep downside: there is no aggressive dovish shock being priced, so euro sellers have little macro ammunition beyond profit-taking after the run toward 1.18. The pair’s modest reaction – a slide from 1.1780 toward 1.1720–1.1730 – fits a market that is squaring positions into the meeting rather than abandoning the bullish narrative.

US Labor Data and Fed Path Keep EUR/USD Supported on Dips Despite Dollar Bounces

On the U.S. side, the latest labor and activity data are slowly eroding the argument for a persistently strong USD. The 64K NFP gain looks decent on the surface, but the combination of 4.6% unemployment, soft wages at 0.1% m/m, and flat retail sales points to a cooling, not overheating, economy. Flash PMIs backing off prior peaks reinforce the idea that demand is losing some steam. At the same time, the Fed has already delivered rate cuts and is signaling a pause rather than an aggressive easing cycle, which keeps front-end yields from collapsing. That mix – slower growth, moderating inflation, but no panic easing – caps upside in DXY while preventing a full-blown crash. For EUR/USD, the practical translation is straightforward: dips toward 1.1700–1.1685 find buyers as long as the market believes the Fed is closer to the end of its cycle than the ECB, and as long as no U.S. data prints re-ignite a strong-dollar trend.

Technical Structure in EUR/USD: 1.1639–1.1611 as the Bullish Line in the Sand

Technically, EUR/USD still trades like a bullish market going through a healthy pause. On the daily chart, price is around 1.1730, above the 100-day EMA at 1.1611 and above the 20-day average near 1.1639. Bollinger bands are widening, and price is leaning toward the upper band, which was recently tested around 1.1788–1.1795. The RSI near 65 on the daily remains in bullish territory, not yet overbought, confirming strong but not exhausted momentum. On the intraday side, short-term supports are stacked at 1.1720, 1.1685, and then 1.1639, with the rising trendline from late November intersecting that middle zone. Resistance sits initially in the 1.1760–1.1788 band, then 1.1810, where prior highs cluster. A daily close above 1.1788–1.1810 would reopen room toward higher extension levels into year-end, while a break below 1.1639–1.1611 would flip the structure from “buy dips” to “wait and reassess.”

Event Risk: CPI, ECB and BoE Can Unlock a Sharp EUR/USD Range Break

Into the next 24–48 hours, EUR/USD is trading as an event-driven instrument, not a clean trend play. Thursday’s U.S. CPI will decide whether markets feel comfortable pushing the dollar lower again or whether they need to re-price a firmer Fed path for 2026. A softer CPI print, with inflation sliding and no new growth scare, typically supports a weaker dollar and a stronger EUR/USD, making another test of 1.1780–1.1810 very realistic. A hot CPI surprise would likely strengthen the dollar, pull EUR/USD back toward 1.1685–1.1640, and challenge dip-buyers’ conviction. At the same time, the ECB is expected to hold at 2%, while the BoE leans dovish after UK CPI dropped to about 3.2%, hitting the GBP and indirectly supporting the euro on the crosses. All of this is taking place with year-end positioning and large options interest concentrated around 1.1750–1.1800, which can temporarily “pin” spot near these levels until one of the macro catalysts forces a break.

Trading Stance on EUR/USD: Bias Bullish, Buy Dips Above 1.1639–1.1611

Putting it together, the structure on EUR/USD remains bullish with controlled risk. The pair is trading near 1.1720–1.1730, above all the key moving averages that matter for trend definition, with the macro narrative still favoring a weaker medium-term USD against a euro backed by an ECB that is not rushing into deeper cuts. As long as EUR/USD holds above the 1.1639–1.1611 zone, the bias is buy on dips, not neutral and not bearish. A reasonable tactical stance is to treat pullbacks into 1.1720–1.1685 as accumulation territory, with upside focus on a retest of 1.1760–1.1788 and then 1.1810 if CPI and ECB do not deliver a hawkish shock for the dollar. Only a clean break and daily close below 1.1610 would downgrade the pair to a hold / neutral view and open room toward 1.1550–1.1500. Until that happens, the tape says one thing: EUR/USD is still a bull market taking a breather, and 1.17 is the level the market is fighting to defend.

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