EUR/USD Price Forecast - Eur Holds 1.1950 as Weak DXY and Fed Turmoil Tilt The Pair Higher

EUR/USD Around 1.1950: Weak Dollar, Cautious Euro, Bias Still Up

EUR/USD Trading Zone, Structure And Reference Levels

EUR/USD trades close to 1.1950, sitting in a tight band between intraday highs just under 1.2000 and a base around 1.1900. The last impulse from the 1.1680 area topped near 1.2082–1.2085, a cluster that aligns with a 261.8% Fibonacci extension of the prior 1.16–1.20 leg. That zone is the current medium-term ceiling and marks the point where fresh buyers backed off. The short-term structure is still constructive: price holds above the rising trendline from 1.1680, stays above the 1.1895 region where the 50-period moving average on the intraday chart runs, and continues to print higher lows above 1.1900. Immediate support sits first at 1.1960–1.1935, where the trendline and the last breakout band converge, then at 1.1900 as the key intraday floor. A deeper slip would expose 1.1850, the 27 January low that defines the edge of the current bullish leg. On the upside, the first cap is the psychological 1.2000 barrier, followed by 1.2050, and then the 1.2082–1.2085 high, which remains the main level euro bulls need to clear to open a path toward 1.22+.

US Dollar Index Near 96: Technical Damage And Fed Credibility Risk

The US Dollar Index (DXY) trades around 96.00–96.15, sitting near a four-year low and already more than 2% lower in 2026. A clear descending triangle on the daily chart broke down through the 97.50–97.00 support band, which now acts as resistance. Price remains well below the 50-day moving average, while momentum tools show selling pressure is still dominant: recent candles have long bearish bodies, the RSI sits below 40, and bounces attract sellers rather than follow-through buying. Fibonacci projections point to the next support near 95.60, with further risk toward 94.80 if that level fails. On the policy side, the Fed funds rate is locked in the 3.50%–3.75% corridor after three earlier cuts. The latest meeting kept rates unchanged, with Stephen Miran and Christopher Waller arguing for a 25 bp cut. Jerome Powell repeated that inflation is above the 2% target, which sounds hawkish on paper, but markets do not trade the wording; they trade credibility. Traders price steady policy into the end of the current quarter and likely until Powell’s term expires in May, while still expecting around two cuts later in 2026. At the same time, the combination of a criminal investigation into Powell and political moves aimed at Lisa Cook undermine the perception of an independent Fed. That political premium drags the dollar lower even without aggressive rate reductions.

Eurozone Sentiment, Policy Signals And What They Mean For EUR/USD

The EUR side of EUR/USD has support from data but faces policy noise of its own. Confidence numbers have turned decisively better. Eurozone Consumer Confidence holds at -12.4, in line with expectations, but the broader Economic Sentiment Index jumped from 97.2 to 99.4 instead of dropping to 97.0 as forecast. Industrial Confidence improved from -8.1 to -6.8, and Services Sentiment climbed from 5.8 to 7.2, beating expectations around 6.0. The performance grid shows the EUR marginally stronger than the USD on the day and firmer than GBP, confirming that euro demand is present even with the pair consolidating. The policy front is where the first cracks appear. The standard message that ECB policy is “in a good place” is starting to fracture. Martin Kocher has publicly raised rate cuts as an option for the first time since June last year, signalling that part of the Governing Council is no longer fully comfortable with current settings. At the same time, German Chancellor Friedrich Merz has complained that dollar weakness is hurting German exports, an indirect warning that excessive EUR/USD strength could trigger more direct pressure on the ECB. That combination supports the euro near current levels but argues against assuming a one-way move much beyond the 1.21–1.22 region without policy pushback.

Short-Term Tape On EUR/USD: Momentum Cooling Inside A Bullish Range

On short-term charts, EUR/USD is clearly digesting gains rather than reversing trend. After the rejection near 1.2082–1.2085, the pullback stalled in the 1.1900 area and buyers have defended that zone repeatedly. Candles on the 2-hour chart show small bodies and balanced wicks, which fits a pause in trend, not a sharp distribution phase. The RSI on the 4-hour view hovers near 60, indicating a moderately positive bias, while the MACD has slipped below the signal line and the histogram has turned slightly negative, a profile that points to fading upside momentum, not outright weakness. As long as closes stay above 1.1935–1.1900, dips look like opportunities rather than the start of a deeper down-leg. A sustained break below 1.1900, followed by a move under 1.1850, would signal that the market is no longer willing to hold the recent higher-low structure and would shift the bias from constructive to neutral.

Dollar Politics, Trade Policy Noise And Their Spillover Into EUR/USD

The pressure on the USD is increasingly driven by politics and trade strategy, not just rate spreads. Markets react to President Trump’s erratic tariff threats and open criticism of the Fed as direct attacks on two key pillars of dollar strength: predictable trade leadership and institutional stability. Even with policy rates well above zero, the currency trades like an asset with eroding premium. The fact that the DXY is down over 2% year-to-date despite the absence of heavy new easing shows how much weight investors assign to governance risk. Treasury Secretary Scott Bessent has reiterated that Washington still pursues a “strong-dollar” line, but those words compete with headlines about attempts to reshape the Fed Board and politically target the Chair. Large asset managers understand that central-bank independence is a core reason the dollar holds reserve status; any sustained attack on that independence is a structural negative for the currency. This environment favours EUR/USD upside as long as the Eurozone does not generate a bigger self-inflicted shock.

Macro Data Triggers For EUR/USD: US Labor, Trade And Orders Versus European Stability

Near-term direction for EUR/USD will pivot on incoming US figures. Weekly Initial Jobless Claims are expected to edge up to around 205–206K from 200K. A print significantly above that band would reinforce the story of a gradually cooling labour market and keep the dollar offered; a surprise drop would give the currency only temporary support while Fed politics dominate the medium-term picture. Later in the session, US Factory Orders are projected to rebound by roughly 1.6% after a 1.3% decline, which would indicate some stabilisation on the manufacturing side. The Goods and Services Trade Balance is forecast to widen to about -$40.5 billion from -$29.4 billion; a wider deficit fits the theme of a softer dollar and a US economy that is still importing more than it exports. On the Euro side, the latest sentiment upside already underpins the currency. The main risk in the coming weeks is a shift in ECB communication. More explicit discussion of rate cuts or a louder chorus of complaints about euro strength would be the first indication that policymakers intend to resist further appreciation beyond the 1.21–1.22 region.

Global Macro Role Of EUR/USD Near 1.20 And The Feedback Loop Into Risk Assets

The move in EUR/USD toward 1.20 has become a key macro signal beyond FX. In commodity markets, changes in the pair reshape relative pricing power. Normally, a stronger euro would erode the competitiveness of European exporters compared with US suppliers, particularly in grains. Recent behaviour is more complex. With EUR/USD near 1.20, Paris and Chicago wheat futures have not sold off in proportion to the currency move. That shows global demand and supply dynamics are cushioning the FX shock. Instead of a one-way impact on outright prices, the euro’s strength is showing up in how producers hedge, how specs manage their short exposure, and how benchmarks share pricing power. For macro desks, EUR/USD around 1.19–1.20 now functions as a barometer of confidence in US policy versus European stability. As long as the euro holds firm while the DXY grinds toward 95.60–94.80, portfolios treat the dollar as the weak leg and keep tilting toward alternatives, including the common currency.

Positioning Stance On EUR/USD: Buy, Sell Or Hold At 1.19–1.20

At roughly 1.1950, with EUR/USD trading in a 1.1900–1.2000 corridor, the DXY sitting near 96.00 and pointing toward 95.60, Eurozone sentiment indices surprising to the upside, and only the first soft hints of ECB discomfort with current levels, the balance of evidence supports a bullish stance on the pair. Technically, the structure is still that of an uptrend in consolidation: price holds above the rising trendline from 1.1680, trades above the 1.1895 50-period moving average, and respects the sequence of higher lows above 1.1900 while sellers fail to force a breakdown despite weaker momentum. Fundamentally, the euro benefits from improved domestic data and from a backdrop where Fed independence, US trade policy and political interference weigh on the dollar more than current rate settings can offset. The cleaner trading plan is to treat EUR/USD as a Buy with controlled risk, focusing on dips into the 1.1935–1.1900 area as accumulation zones and defining risk below 1.1850. Upside reference points sit at 1.2000, 1.2050, and the 1.2082–1.2085 high. A daily close above that cluster would unlock a path toward 1.22+. A decisive break below 1.1850 would neutralise the bullish bias and force a reassessment, but current data and price action do not justify that scenario as the base case.

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