EUR/USD Price Forecast - Euro Steadies Near 1.1650 as PCE Inflation Data Set the Stage for a Break Above 1.17

EUR/USD Maintains Fragile Grip Above 1.1650 as Fed Cut Bets and Eurozone Data Clash Ahead of U.S. PCE Report

The EUR/USD pair trades around 1.1650, extending its volatile consolidation phase after a sharp eight-day rally stalled near 1.1679—its highest level in seven weeks. The euro’s upward momentum, fueled by a combination of strong Eurozone growth data and broad U.S. dollar weakness, is now encountering a decisive technical wall as traders reposition ahead of the U.S. Core PCE Price Index release and next week’s Federal Reserve meeting.

Macro Context: Eurozone Outperforms While Fed Shift Undermines the Dollar

The euro has been underpinned by a better-than-expected Eurozone GDP growth of 0.3% in Q3, above both the 0.2% consensus and the previous quarter’s 0.1%. Annual growth remains at 1.4%, while employment expanded 0.2% quarter-on-quarter, beating expectations for 0.1%. These figures indicate that despite sluggish industrial production, the bloc’s economy retains modest resilience—enough to temper recession fears for now.
In contrast, the U.S. dollar (USD) continues to trade near a five-week low, with the Dollar Index (DXY) fluctuating around 98.90, pressured by markets pricing in an 85–87% probability of a 25-basis-point Fed rate cut at the upcoming December 10 policy meeting. The dovish repricing, driven by a series of weak U.S. data and dovish Fed commentary from officials like John Williams, has limited the dollar’s ability to capitalize even on strong labor prints, including Initial Jobless Claims falling to 191,000, their lowest in three years.

PCE Inflation Data Takes Center Stage

Investors now await the U.S. PCE Price Index, the Fed’s preferred inflation gauge. Headline PCE is projected at 2.8% year-on-year, up slightly from 2.7%, while the core reading is expected at 2.9%, unchanged. A softer print would reinforce expectations for a December rate cut, likely pushing EUR/USD above 1.1680 toward the October 17 high near 1.1730, whereas an upside inflation surprise could cap the pair’s advance or trigger a correction back to 1.1600–1.1630.

Technical Structure: Euro Bulls Testing Overhead Resistance

From a technical standpoint, EUR/USD remains within a defined ascending channel extending from the late-November low of 1.1560. The pair trades above both the 50-day EMA and 200-day EMA, confirming a near-term bullish bias. The RSI stands at 61, maintaining positive momentum though not yet in overbought territory.
Resistance is clustered at 1.1679–1.1700, coinciding with the 100% Fibonacci extension of the November advance. A breakout beyond 1.1700 would target 1.1730–1.1750, while failure to clear that zone could invite profit-taking back to 1.1630, with deeper support at 1.1590–1.1575—levels aligning with the 38.2% and 50% retracements of the latest rally.

Dollar Dynamics: Fed Pivot and Political Uncertainty Weigh on USD

The U.S. dollar’s inability to sustain gains despite resilient data underscores a structural shift in sentiment. Traders are focusing on policy direction rather than incremental improvements in economic indicators. Reports that Kevin Hassett may replace Jerome Powell as Fed Chair have added to the uncertainty. Markets fear a leadership change could accelerate an aggressive easing cycle, deepening pressure on yields and prolonging dollar weakness.
The U.S. 10-year yield remains steady near 4.12%, signaling cautious sentiment ahead of the inflation release. Should the PCE data validate the current disinflation trend, the dollar could fall below DXY 98.50, clearing the way for EUR/USD to challenge 1.1750 in the short term.

European Data Flow and Sentiment

On the European side, retail sales stagnated at 0.0% in October, slightly below expectations of 0.1%, while manufacturing activity surprised to the upside. Despite mixed consumer metrics, the ECB’s policy stance remains defensive, with officials including Villeroy de Galhau emphasizing symmetric risks around inflation. The ECB is expected to maintain restrictive policy into Q1 2026 but is under growing pressure from slowing real wage growth and rising unemployment risk in southern Europe.

Technical Confluence and Market Positioning

The short-term bias for EUR/USD remains bullish while trading above the support band at 1.1630–1.1590. The trendline from the November 26 low continues to act as dynamic support. Momentum divergence on the 4-hour MACD, however, signals potential exhaustion, meaning a temporary pullback cannot be ruled out before any new breakout. Institutional positioning shows an increase in Euro net longs, up nearly 12% week-on-week, according to latest CFTC data, reflecting confidence in the pair’s medium-term strength.

Risk Events Ahead: Fed Decision, U.S. CPI, and ECB Minutes

Next week’s FOMC meeting and U.S. CPI will determine whether the euro can sustain its climb beyond the 1.17 handle. The ECB minutes, also due, could provide insight into how close the central bank is to adjusting its restrictive tone. Traders are expected to monitor the 1.1590 floor as the line separating consolidation from reversal. Sustained closes above 1.1700 would confirm a continuation of the broader recovery phase that began from the October low near 1.0500.

Verdict on EUR/USD Trend and Target Levels

The balance of technical and macro evidence continues to favor euro strength against the dollar in the short term. With strong Eurozone GDP data, an expected U.S. rate cut, and a softening greenback, EUR/USD is positioned to retest 1.1730–1.1750, followed by 1.1800 if bullish momentum persists. On the downside, only a decisive daily close below 1.1575 would negate the current uptrend and reopen the path toward 1.1500.
The structure remains intact, the fundamentals support the case for a bullish bias, and the technicals confirm stabilization above key averages. As long as EUR/USD trades above 1.1600, the trend points toward a Buy outlook with a near-term target range of 1.1730–1.1800 and potential medium-term extension toward 1.1900 if the Fed confirms its dovish policy cycle.

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