EUR/USD Price Forecast - Eur Bulls Lock Onto 1.19 as US Shutdown and Fed Uncertainty Crush the Dollar

EUR/USD: Bulls Drive Toward 1.2000 As Dollar Politics Break And Bias Stays Long

Macro pressure turns against the US Dollar and keeps EUR/USD pinned near 1.19

Spot EUR/USD trades around 1.1870–1.1900, crowding the 1.19 band that capped the pair back in 2021 and printing the strongest daily closes since late 2025. The move is not about vague “risk-on” sentiment. It is driven by a direct clash between solid US macro data and collapsing confidence in US policy stability. US GDP expanded 4.4% q/q versus 4.3% expected, confirming a strong US cycle and very low near-term recession risk. Under normal conditions that kind of print would support the USD and drag EUR/USD back toward 1.1600. Instead, the pair is challenging 1.1907–1.1918 resistance with the market openly targeting the 1.2000 psychological figure as the next upside magnet. The reason is the repricing of US politics as a structural drag on the USD, overshadowing the growth advantage.
Shutdown risk is at the center. Funding must be agreed by January 30 and Democrats are threatening to block the bill over Homeland Security and border enforcement changes, after the deaths linked to the Minneapolis crackdown. That raises the odds of an early-February government shutdown. Every day this standoff stays alive, investors attach a higher risk premium to US assets and sell dollars on strength. With the US Dollar Index (DXY) stuck around 97.05–97.10 and unable to recover after breaking key technical support, EUR/USD becomes the straightforward expression of a structurally weaker dollar rather than a story of euro euphoria.

Political risk premium beats strong GDP and caps the USD even with 4.4% growth

Minneapolis unrest and the budget fight sit on top of a broader narrative of erratic US policy. Markets have already watched an escalation cycle from Greenland threats to renewed tariff pressure on Canada and South Korea, after multiple trade disputes with the EU. Each episode follows a similar pattern. The dollar gets an initial defensive bid as a liquidity haven, then bleeds lower as investors hedge longer term US policy and institutional risk.
The macro numbers argue for a higher dollar. A 4.4% q/q GDP print, stronger than the 4.3% forecast, removes the recession argument and reduces the urgency for aggressive Fed easing. That should, on paper, support the USD and argue for cautious euro strength. Instead, rate-cut expectations have simply shifted further out, with the market now assuming the next move around June, while pricing growing uncertainty about the independence of the Federal Reserve and the identity of the next Fed Chair. Betting markets are already leaning toward a new chair from the private sector, such as a senior BlackRock executive, which raises questions about future policy direction. A central bank whose path can be reshaped by political pressure is a weak foundation for a reserve currency.
That is why the dollar fails to rally on good data. Investors are discounting political risk and institutional noise more heavily than the incremental growth surprise. EUR/USD benefits directly, holding its gains near 1.19 and shrugging off what would normally be dollar-positive macro news.

Technical picture for EUR/USD: confirmed uptrend with trend-followers now long

Technically, EUR/USD has transitioned from range to trend. The pair has posted its highest daily close since September 2025, breaking the previous ceiling that contained price for months. On the daily chart, the 50-day moving average has crossed above the 200-day moving average, a classic bullish “golden cross.” For systematic trend-following funds, that is a mechanical buy trigger. They increase long exposure in EUR/USD with wide stops and multi-week or multi-month horizons.
Price is climbing inside an ascending channel that began around 1.1670–1.1680. Every pullback so far has been contained above prior swing lows, which is exactly how this pair typically trends. The current consolidation around 1.1870 sits just under the 1.1907–1.1918 resistance cluster, the highest region since June 2021. The market has poked that area and stalled, but it has not reversed. This is classic consolidation below resistance, not a reversal structure.
Momentum confirms strength rather than exhaustion. The 14-day RSI sits around 68.9, just below the 70 overbought threshold, signaling a strong bullish trend that is extended but still intact. On intraday horizons the RSI has cooled from overbought toward the 50–60 zone while spot holds above 1.1830–1.1840. That pattern—time correction with limited price damage—is how strong trends digest profit taking without breaking.

Support zones define the buy-the-dip map for EUR/USD, not a topping configuration

The support structure beneath 1.19 is layered and well defined, which favors a buy-the-dip approach rather than top picking. The first support band runs through 1.1865–1.1870, roughly the 0.236 Fibonacci retracement of the 1.1679 → 1.1907 leg. The fact that price repeatedly stabilizes in this region shows real money demand on shallow dips.
A more substantial buy zone sits around 1.1834–1.1840, aligned with the 0.382 Fibonacci retracement near 1.1839 and previous short-term reaction lows. That area is the first meaningful level where medium-term accounts are likely to add EUR/USD length. Below that, the 1.1800 figure is identified by prior analysis as a level the pair can revisit without breaking the broader uptrend. Historically, EUR/USD tends to trend in a grinding fashion with deep corrective swings. Moves back to 1.1800 or slightly lower are noise inside a rising structure, not a trend change, as long as higher timeframe support holds.
The daily chart adds deeper structural lines. The 9-day EMA near 1.1770 and the lower boundary of the ascending channel near 1.1750 form the first dynamic support band for the current leg. A daily close above 1.1750–1.1770 keeps bulls fully in control. Further down, the 50-day moving average around 1.1697 and the seven-week low near 1.1589–1.1570 mark the outer edge of the bullish regime. Losing 1.1697 on a sustained basis would be the first serious warning signal. A break below 1.1589 would effectively terminate the current bullish wave and flip the medium-term bias.
At present, EUR/USD trades comfortably above all of these levels, with shorter-term moving averages stacked above longer-term ones. That alignment is typical of mature but still valid uptrends, not of a market about to roll over.

DXY breakdown reinforces the upside channel in EUR/USD and confirms dollar vulnerability

The euro’s strength is amplified by a clean technical breakdown in the US Dollar Index. The DXY recently closed below a symmetrical triangle support that had contained price since October, and it did so on a strong bearish candle that confirmed acceptance of lower levels. The index is now trading around 97.05–97.10, under the 50-day moving average, with the 200-day moving average near 99.40 still sloping downward. Former support at 97.70 has turned into resistance, and the next obvious downside targets cluster around 96.25 and 95.60.
Because the euro is the largest component of the DXY, that breakdown directly supports the EUR/USD bullish channel drawn from 1.1679 into the 1.19 area. As long as DXY remains capped under 97.70 and tracks toward 96.25, there is no technical justification to label the current euro rally as a blow-off top. The dollar side of the cross is structurally weak from a chart perspective, and that weakness transfers into higher EUR/USD levels almost mechanically.

Short-term EUR/USD signals show healthy consolidation instead of trend exhaustion

In the very short term, there are signs of fatigue, but they fit a consolidation phase rather than a bearish reversal. After a three-day push that carried EUR/USD to the 1.1900 region, the pair has edged slightly lower, trading around 1.1870 in Asian and early European trading. Candles on the H1–H2 timeframes are small with mixed wicks, typical of a market that is pausing inside a trend ahead of fresh macro catalysts such as US ADP employment, consumer confidence, and the Fed decision.
Despite that pause, the technical bias on intraday charts stays bullish. Price remains above both the 50-EMA and 200-EMA, with the 50-EMA clearly above the 200-EMA. The rising intraday trendline and the channel that began near 1.1679 are still intact. That keeps the playbook simple. Short-term participants can look to buy pullbacks into 1.1865–1.1840–1.1800 with risk defined below the channel and the daily EMAs, instead of trying to fade every move above 1.19.
The euro looks slightly weaker versus the dollar on a very narrow intraday heat map reading (around -0.08%), but that profile is noise inside a stronger multi-week uptrend. Small fluctuations around 1.1870 reflect positioning and data timing, not a decisive shift in structure.

Fundamental balance: EUR/USD is pricing rejection of the USD, not a euro boom

The fundamental narrative behind this move is crucial. EUR/USD strength is not born out of a powerful eurozone growth story; it is driven by a deliberate rejection of the USD as a clean safe asset. The US side of the pair is doing most of the work. In 2025, the dollar fell roughly 9.5% against a basket of currencies, its steepest annual decline since 2017, breaking the perception of the US currency as an unchallenged store of value. That slide coincided with repeated trade confrontations, heavy fiscal deficits, and growing debate around the dollar’s long-term reserve status.
Those themes are now accelerating. Uncertainty over the next Fed Chair, open threats of tariffs on allies, persistent budget fights, and renewed questions about adherence to a rules-based international order all push investors to diversify. Capital flows toward gold, toward reserve alternatives, and toward major FX where institutional risk appears lower—or at least less disorderly. EUR benefits simply by not being at the center of these shocks.
Within Europe, stability is the main asset. There is no major new sovereign crisis, no sudden ECB shock, and no fresh fragmentation story. That is enough to sustain demand for euro assets when set against heightened US political noise. EUR/USD can trade at 1.19–1.20 without a spectacular eurozone boom, as long as markets believe the US political premium will stay elevated and the Fed path is less predictable.

Trade stance and verdict: EUR/USD structure supports a Buy bias with 1.2000 on the radar

When you combine the macro backdrop, the dollar index breakdown, and the technical profile in EUR/USD, the message is unambiguous. Trend conditions are active, not rangebound. The pair has confirmed an uptrend with a golden cross, it has registered the highest closes since 2025, and it sits just beneath a multi-year resistance band that, once broken, opens the way toward the 1.1950–1.2000 zone.
On the macro side, 4.4% US GDP growth and low recession risk should be dollar-positive, but they are being overwhelmed by shutdown fears, Fed-chair uncertainty, and aggressive trade posturing. That mismatch—strong data, weak currency—is exactly what you see when a risk premium is being attached to the policy framework, not to the business cycle. As long as that remains the case, rallies in the USD are likely to be sold.
Structurally, EUR/USD trades above rising moving averages, above long-term support at 1.1697, and well above the key pivot around 1.1589 that would mark a regime change if broken. Support layers at 1.1865, 1.1834–1.1840, 1.1800, and 1.1750–1.1770 are the logical zones where fresh long positions can be added or existing exposure defended. The obvious topside reference points are 1.1907–1.1918, 1.1950, and the psychological threshold at 1.2000.
On this evidence, EUR/USD is best treated as a Buy with a clear bullish bias, with a strategic focus on buying dips rather than fading strength, at least while spot holds above the 1.17 handle and the US political and institutional cloud over the USD remains unresolved.

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