EUR/USD Price Forecast: EUR Slides Toward 1.18 as Dollar Strength and Fed Risk Cap the Euro

EUR/USD – Dollar repricing keeps the pair pinned near 1.18 as support creaks

Spot picture – where EUR/USD is trading now

EUR/USD is oscillating around 1.1840–1.1850 after a clean slide from last week’s highs. The pair has already tested the 1.1820–1.1830 demand pocket and bounced, but every recovery into 1.1860–1.1870 is being sold. Price action is a controlled grind lower inside a wider 1.1765–1.2000 range, with the market now sitting in the lower half of that band where sellers historically have the upper hand. Intraday, the tape is heavy: lower highs, shallow bounces and quick rejections as soon as the pair pokes its head above 1.1850.

Macro backdrop – how EUR and USD fundamentals line up

The macro balance still tilts toward the USD. Markets are pricing roughly 62 basis points of Fed easing for 2026, equivalent to two 25 bp cuts and about a 50% chance of a third, with the first move pencilled in around June. Softer inflation data recently encouraged that path, but the labour report showing the strongest employment growth in more than a year and an unexpected fall in unemployment reminded everyone that the US economy can still absorb tighter policy without stalling. That combination keeps US real yields elevated and limits how far the dollar can fall ahead of the FOMC minutes and the next PCE core inflation release. On the European side, Germany’s and the euro area’s ZEW indices eased in February, confirming a weak growth pulse and leaving the EUR without a strong domestic catalyst. The ECB is trapped between sluggish activity and restrictive real rates, while the Fed at least enjoys better growth, and that relative gap is exactly what you see reflected in EUR/USD holding heavy below 1.19.

Dollar context – what DXY is telling EUR/USD traders

The dollar index is sitting around 97.2–97.6, respecting support and leaning against resistance without breaking either side decisively. On the four-hour chart, DXY is holding above a 0.382 Fibonacci retracement near 96.82 and pushing toward the 0.5 retracement zone around 97.21, with a rising trendline from roughly 95.55 still intact. The 200-period EMA around 97.9–98.0 caps the topside and forms a clear ceiling for now. Candles with small bodies and long wicks near 97.6 show indecision at resistance rather than a clean reversal lower, even as sentiment surveys show USD bearishness at the most extreme levels since roughly 2012. For EUR/USD, that mix means rallies struggle to extend: the euro does not get the full benefit of dollar dips, and any dollar stabilization quickly pushes the pair back toward the 1.1830–1.1800 area.

Medium-term technical structure – channel, range and key EUR/USD levels

On the daily chart, EUR/USD is sliding inside a downward-tilting channel carved out below the mid-range of 1.1890–1.1900. The broader structure is a 1.1765–1.2000 box, and price is now pressing the lower half of that box. The key reference levels are clear on the chart. The 1.2000 handle is the upper boundary and psychological ceiling that has repelled prior advances. The 1.1927 and 1.1997 zones cluster recent swing highs and act as a resistance shelf capping rebounds. The 1.1890–1.1900 band is the mid-range; a daily close back above it would neutralise the immediate bearish tone but would not flip the trend on its own. The 1.1856 zone is a tactical pivot that has flipped between resistance and support over the past sessions. The 1.1835 level is intermediate daily support and effectively the first structural line in the sand inside the range. The 1.1820–1.1830 pocket marks short-term demand, where buyers have repeatedly stepped in. The 1.1810 and 1.1800 levels are round-number supports that map closely to signal levels used in intraday strategies. Finally, 1.1765–1.1766 is the key structural floor where the wider range bottom and the 200-period EMA on the four-hour chart meet. As long as the pair trades below 1.1890–1.1900 and keeps respecting these lower supports, the medium-term trend remains a controlled down-drift rather than a reversal.

Intraday structure – how 1.18 is shaping EUR/USD flows

Short-term, EUR/USD order flow is clustering around three narrow bands that define the day’s battle lines. The 1.1831–1.1835 zone has behaved as an intraday fulcrum. When price dips into it and holds, you see quick bounces; when it breaks and fails to reclaim it, follow-through selling appears toward 1.1810–1.1800. The 1.1856–1.1887 pocket is the tactical pivot. Yesterday’s failed short around 1.1887 showed that squeezes are possible, but the repeated pattern is simple: attempts to build above 1.1856 stall, and each rejection there sends the pair back toward 1.1830. The 1.1890–1.1919 band contains both the mid-range and earlier resistance; it is the area where breakout attempts must stick on a daily basis to convince anyone that the trend is changing. On the one-hour chart, the pair is trading near the lower Bollinger Band, printing lower highs and lower lows. Stochastics sit in oversold territory, allowing for bounces, but MACD remains negative, saying momentum still favours selling strength rather than buying dips unless the structure changes decisively.

Cross-asset signals – what gold and risk sentiment imply for EUR/USD

Cross-asset price action is consistent with a heavy EUR/USD rather than a clear bullish reversal. Gold has spent recent sessions oscillating inside a broad 4,550–5,420 dollar band, with pullbacks into roughly 4,850–4,900 being bought but spikes above 5,100 sold as traders de-risk ahead of the Fed minutes. That behaviour shows a market that still believes in the longer-term XAU/USD uptrend but also respects the risk of hawkish surprises that push real yields and the dollar higher. At the same time, risk sentiment has been buoyed by progress in US–Iran talks, with comments out of Geneva describing “productive” meetings but “no final deal yet”. That tone removes part of the safe-haven bid from the dollar without fully undermining it. For EUR/USD, the combination of gold consolidation, a still-supported dollar index around 97.2–97.6 and moderately positive risk appetite points to either a range or a mild drift lower, not a clean upside break. The pair will only get a genuine tailwind if DXY fails at 97.6, slides back under 97.2 and gold pushes through resistance at the top of its consolidation band.

Scenario map – what next for EUR/USD around 1.18

The current configuration of macro and technical factors produces three main paths. The base case remains a grind lower toward 1.1765. Under this scenario, each rally into 1.1856–1.1887 is sold, the euro continues to lack domestic catalysts and the dollar retains support from resilient US data and a slower easing trajectory. A daily close below 1.1830, followed by intraday failures at that level, opens 1.1810–1.1800 and, if pressure persists, a full test of the 1.1765 floor where the broader range low and the four-hour 200-EMA converge. A second path is data-driven range trade between roughly 1.1830 and 1.1927. If the Fed minutes and PCE core inflation come in near expectations, the pair can continue to oscillate within this band. In that environment, dips into 1.1831–1.1835 attract buying interest, but attempts to climb into 1.1890–1.1927 repeatedly fail as long as DXY stays pinned below 97.9 and above 96.8. Volatility can be exploited, but direction remains undecided. The least likely but still possible path is a squeeze higher toward 1.1997 and 1.2083. For that to materialise, the dollar index has to fail convincingly at 97.6, roll over toward 96.8, and the Fed narrative must shift dovish enough to revive talk of three cuts with high confidence. A daily close above 1.1927, followed by a close above 1.1997, would bring 1.2083 into play. Right now, the way EUR/USD rejects resistance argues against giving that scenario high odds.

Stance on EUR/USD – bias, trade logic and levels that flip the view

Putting the macro drivers, DXY context and the technical map together, the balance still favours a bearish stance on EUR/USD, with emphasis on selling strength rather than trying to anticipate a bottom. The pair is trading in the lower half of a well-defined 1.1765–1.2000 range, repeatedly failing at 1.1856–1.1890, and doing so against a backdrop where US data are outpacing the euro area and the Fed is expected to ease later and less aggressively than many hoped a few months ago. The working frame is straightforward: as long as spot remains capped below roughly 1.1890–1.1900 and the dollar index holds in the 97.2–97.6 band, downside toward 1.1810–1.1800 and potentially 1.1765 offers the better risk-reward, while any decisive daily close above 1.2000, especially if accompanied by a drop in DXY under 96.8, would invalidate the bearish bias and force a reassessment of the trend.

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