EUR/USD Price Forecast - Eur Near 1.16: Dollar Strength And 4.4% Unemployment Put 1.1598 Support In Play

EUR/USD: Pressure Builds Near 1.16 As Dollar Regains Control

Current EUR/USD Trading Zone And Immediate Pressure

EUR/USD has unwound more than 1.6% from the December peak around 1.1747–1.1775 and now trades heavy in the 1.16–1.17 band. The pair has logged nine down sessions out of the last eleven and two consecutive negative weeks, which is not noise but a meaningful correction from the late-year breakout. On the dollar side, the December Non-Farm Payrolls report showed 50,000 new jobs versus expectations of 60,000, but the unemployment rate fell from 4.5% (revised from 4.6%) to 4.4%. That single line item was enough to support the greenback because it reinforces the “still-tight” labor narrative and keeps the Federal Reserve under less pressure to rush into aggressive cuts. The U.S. Dollar Index has pushed through the 98.85–99.00 resistance band and opened room toward 100.25–100.40, while U.S. 2-year yields trade above roughly 3.5% and 10-year yields above 4.15%. Against that backdrop, EUR/USD naturally trades on the back foot despite a slightly better-than-expected euro area retail sales print at +0.2% month-on-month versus +0.1% forecast. The euro has domestic support, but the cleaner impulse right now comes from the U.S. side.

Weekly EUR/USD Structure And Major Levels

On the weekly chart, EUR/USD broke higher in December after defending the early-month line in the sand near 1.1589. From the November low, the pair rallied almost 3% before stalling exactly at the 1.1747–1.1775 resistance cluster. That band is defined by the 2025 high-week close, the 61.8% retracement of the September decline, and the 2025 high daily close. Price then spent roughly four weeks failing to clear this ceiling, turning it into a clear distribution zone. The subsequent decline has dragged spot down toward initial weekly support at 1.1598, which is the 61.8% retracement of the November advance and also where a key internal trendline (“75% parallel”) converges over the next few weeks. As long as EUR/USD holds 1.1598 on a weekly closing basis, the move can still be classified as a standard pullback within a broader up-leg. A clean weekly close below 1.1598 would confirm that a more significant high has been set at 1.1747–1.1775 and would reframe this move as the start of a broader down phase.

Downside Grid: 1.1598, 1.1500, 1.1394 And 1.1254

If EUR/USD loses 1.1598, the next technical magnet is the 1.1497–1.1505 band, which blends the 78.6% retracement of the July rally with the March 2020 and March 2022 highs. A break of that area exposes 1.1394, the April high close that acts as the final line separating a controlled retracement from a full reset of the 2025 advance. Beneath 1.1394 sits a deeper structural pivot at 1.1254–1.1276, combining the 38.2% retracement of the 2025 range with the 2023 swing high. If price ever trades and holds below that zone, the current bullish phase in EUR/USD is effectively cancelled and the market returns to a broad, choppy range with a heavier bearish bias. In other words, 1.1598 is the first decision point, 1.1497–1.1505 is the confirmation of a more aggressive correction, and 1.1394 plus 1.1254–1.1276 are where medium-term positioning becomes outright defensive for euro bulls.

Upside Map: What EUR/USD Needs To Reclaim To Turn Clearly Bullish

On the topside, the structure is equally well-defined. The first resistance layer is the old floor around 1.1690–1.1700, where multiple bullish consolidations formed in December. After the breakdown, that band is now a supply shelf where trapped longs will want to exit on any rebound. Above that, the 1.1747–1.1775 pocket is the primary ceiling; only a decisive weekly close through 1.1775 would validate an uptrend resumption. If EUR/USD does reclaim that zone, the next upside targets are the 2025 swing high and 100% extension of the 2022 advance at 1.1917–1.1919, followed by the 38.2% retracement of the entire 2008 decline at 1.2020. That 1.2020 area is a macro level; if reached, it will attract new medium-term sellers. Further up, the 2017 swing high near 1.2092 becomes the next resistance where euro strength would again be challenged. For now, with spot sitting far below 1.1747 and hovering around 1.16–1.17, these upside levels are reference points for a scenario that still needs to be earned.

Short-Term EUR/USD Tape And Cross-USD Confirmation

On the 4-hour and daily timeframes, EUR/USD has a dense support cluster in the 1.1615–1.1630 area. Intraday breaks of that band have so far lacked decisive follow-through, but a sustained move below would drag the pair straight into the weekly 1.1598 pivot. Under that, 1.1500–1.1515 becomes the next tactical target, where short-term traders will watch for bottom-fishing attempts. The broader dollar complex confirms pressure on the euro. USD/CAD is grinding into the 1.3890–1.3905 resistance area after Canada’s unemployment rate climbed from 6.5% to 6.8%, reinforcing dollar strength against commodity FX. USD/JPY is pressing the 158.00 barrier as U.S. yields push higher, with 2-year and 10-year Treasuries above 3.5% and 4.15%, reinforcing carry demand into the dollar. The U.S. Dollar Index holding above 98.85–99.00 and probing toward 100.25–100.40 signals a broad USD bid rather than a euro-specific story. With this backdrop, EUR/USD rallies are being sold and dips are not yet being aggressively defended.

Event Risk: U.S. CPI As The Catalyst For The Next EUR/USD Leg

The next binary trigger for EUR/USD is U.S. CPI. After December NFPs and the unemployment rate drop to 4.4%, the labor side of the Fed’s dual mandate looks stable. Inflation now decides how quickly rate-cut expectations can come back into the price. A softer-than-expected CPI print will push markets to re-price earlier and potentially deeper Fed cuts, likely knocking the dollar index back from the 99–100 area and allowing EUR/USD to rebound. In that case, a move back toward 1.1690–1.1700 and a test of 1.1747–1.1775 becomes viable, with a medium-term path toward 1.1917–1.2020 if the data shift is big enough. A hotter CPI print will do the opposite: Fed cuts get pushed out, U.S. front-end yields rise, the dollar index can break and hold above 100.40, and EUR/USD will be pressured to break 1.1598 cleanly and slide toward 1.1500–1.1505 and potentially 1.1394. Because speculative positioning is skewed long euro versus short dollar, a downside break below 1.1598 would have fuel from forced long liquidation and could accelerate faster than a slow-grinding upside recovery.

Higher-Timeframe Context: Zones, Trend Phase And Market Mood

From a zone and structure perspective, the story is straightforward. A strong demand zone formed near 1.1558 in late November and triggered the December surge; that remains a deeper line where medium-term bulls will try to defend if price overshoots the 1.1598 level. Above, multiple demand “shelves” were built around 1.1690–1.1700 in mid-December; those have now flipped into supply after the breakdown. The largest supply concentration sits exactly at 1.1747–1.1775, which is why each attempt higher stalled there before the current correction. In time terms, momentum peaked around the late-December window and shifted into a distribution phase: instead of clean continuation, the market started printing failed pushes higher and heavier reactions lower, with bullish zones breaking and bearish zones holding. The higher-timeframe read is therefore mixed: the trend from the November low is not fully broken, but the market has clearly exited the easy uptrend phase and moved into a corrective environment where macro data will decide the next leg.

Trading Stance On EUR/USD: Hold With A Bearish Tactical Bias

With spot in the 1.16–1.17 band, EUR/USD sits directly on top of its first true weekly support at 1.1598. Selling aggressively here means shorting into the initial demand zone, which is poor risk-reward. Buying aggressively here means ignoring the dollar bid, the break of the 1.1690–1.1700 shelf, and the risk of a hot CPI print. The professional stance at these levels is simple. The pair is a HOLD with a bearish tactical bias. For new positioning, the cleaner setups are away from the current price: rallies into 1.1690–1.1747 that fail are candidates for fresh shorts with stops above 1.1775 and targets at 1.1598 and then 1.1500–1.1505. Longs make sense only after the market proves the floor by rejecting 1.1598–1.1615 and reclaiming at least 1.1700 on a daily close, opening room toward 1.1917–1.2020 over the next legs. If there is a weekly close below 1.1598, EUR/USD shifts from a “buy dips” regime to a “sell rallies” regime, where 1.1600–1.1700 becomes a shorting area and 1.1500, 1.1394 and eventually 1.1254–1.1276 become the logical downside targets. Under current conditions and with the data on the table, EUR/USD is not a high-conviction buy; it is a pair you hold or fade on strength until the 1.1598 decision zone is resolved.

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