EUR/USD Price Forecast - Pair Holds 1.173–1.176 as Fed Cut and DXY 98 Fuel 1.18 Test

EUR/USD Bulls Target 1.18 As Fed Cuts And 98.00 DXY Drag The Dollar Lower

Macro Rate Path, Labor Weakness And EUR/USD Around 1.17–1.18

EUR/USD is trading around 1.173–1.174 on December 12 after hitting a 10-week high in the 1.1750–1.1762 zone and gaining almost 2% over three weeks. The pair has broken cleanly out of the 1.16–1.17 congestion band and is now pressing into a resistance cluster between 1.1760 and 1.1788, with the market clearly treating dips toward 1.17 as entries, not exits. The move is driven by loss of yield and policy premium in the US Dollar rather than a sudden improvement in euro growth, which puts the core of this trend on the USD side of EUR/USD.

Fed Cuts To 3.50–3.75 Band And 44K Jobless Claims Hit The Dollar

The Federal Reserve has already delivered its third 25-basis-point cut of 2025, taking the target range down to 3.50%–3.75%. Official communication implies roughly one more cut in 2026, but markets are not buying that guidance. Rate tools are pricing about a 58% probability of at least two cuts by October 2026, effectively assuming a deeper easing cycle than the dot plot. At the same time, US labor data is now confirming that policy is biting. Weekly jobless claims jumped by 44,000 in early December, the largest increase in more than four years, sending another clear signal that the labor market is cooling and that restrictive policy is no longer harmless for employment.

DXY Pressured Near 98.00–98.34 And Locked In A Bearish Channel

These macro shifts have pushed the US Dollar Index into a structurally weak configuration. DXY is trading around 98.20–98.34, sitting at a seven-week low and moving inside a descending channel that has guided price lower from early December. The upper boundary of that channel is acting as dynamic resistance and continues to cap every rebound, while short-term moving averages above price are sloping down. Nearby support is located around 97.80 and then 97.47, both inside the same channel. As long as DXY remains below roughly 98.76–99.24, the structural backdrop favors further downside in the dollar and supports a higher EUR/USD.

Political Pressure, Hassett Speculation And The Loss Of Fed Independence Premium

The fundamental hit to USD is now amplified by politics. After the latest 25-basis-point cut, public support from the US President for additional easing has reinforced expectations of a dovish bias, directly pressuring the currency. Markets are also gaming a scenario in which a more dovish figure such as Kevin Hassett eventually takes the chair, which investors interpret as a threat to the remaining carry advantage of USD. This mix of political noise and speculation about future leadership reduces the perceived independence premium of the Fed and adds another reason for investors to trim long-dollar exposure.

ECB Holds, German HICP At 2.6% And Policy Divergence Favors EUR

On the euro side, the European Central Bank is not powering the move with aggressive tightening but is winning the relative policy contest. The ECB is widely expected to hold rates at the December meeting, signaling that the easing cycle is basically done for now. German HICP inflation is running at 2.6% year on year with a minus 0.5% monthly print. That combination allows the ECB to argue for patience and a slower path toward cuts compared to the Fed. The gap between a cutting Fed and a cautious ECB is enough to force a steady re-pricing of EUR/USD in favor of the euro even without spectacular Eurozone growth data.

Daily EUR/USD Structure: Breakout Above 1.17 And Rising Averages

Technically, EUR/USD has flipped from a sideways market into a clean bullish trend. On the daily chart, the pair has built a sequence of higher lows from the 1.1600 area and has now broken through multiple resistance layers. Price first reclaimed last week’s high near 1.1681, then cleared the 50% retracement of the September–October range around 1.1693, and then punched above the October 17 swing high in the 1.1727–1.1728 band. The market also tested and briefly broke above the 61.8% retracement near 1.1746, with intraday highs arriving around 1.1759–1.1762. This series of breaks confirms that control has shifted decisively to buyers.

Support Map: 1.1728, 1.1706–1.1707, 1.1689 And The 1.16 Floor

Support has moved higher with the breakout. Immediate demand is now clustering around 1.1727–1.1728, where prior resistance and shallow Fibonacci retracement levels coincide. Deeper support is found at 1.1706–1.1707, overlapping with the 38.2% retracement, and at 1.1689, which marks the 50% retracement and a key prior breakout shelf. As long as EUR/USD holds above roughly 1.1689–1.1700 on a daily closing basis, dips into that area are more likely to represent controlled corrections inside a bullish trend than genuine reversals. The broader structural floor remains closer to 1.1600, the base of the current up-leg.

Trend Filters: 50-Day And 100-Day EMAs At 1.1664 And 1.1635 Anchor The Uptrend

Classical trend filters agree with the bullish view. EUR/USD is trading comfortably above its 50-day exponential moving average around 1.1664 and above its 100-day EMA near 1.1635. Both averages are pointing higher and now act as deeper trend support. A move back toward those averages without a break would likely be treated as a buying opportunity by medium-term players. Daily momentum is also positive. The relative strength index is sitting in the mid-60s, a level that confirms strong upside momentum but does not yet indicate an exhausted, blow-off phase. This is the pattern of a trend that still has room to extend.

Intraday Structure: 100- And 200-Bar MAs Define The 1.1700–1.1719 Buy Zone

Short-term flows tell the same story. On intraday charts, especially the 5-minute and 30-minute frames, buyers are repeatedly defending rising moving averages. The 100-bar moving average has now climbed toward roughly 1.1719, while the 200-bar average is near 1.1706–1.1707. Every dip into the 1.1700–1.1710 corridor during Asian and early European trade has attracted buying interest and launched rotations back toward the 1.1740–1.1760 band. That behavior is typical of a controlled momentum trend: price pulls back to rising averages, weak hands sell, and stronger hands step in higher than before.

Upside Targets: 1.1762–1.1763, 1.1779–1.1788, 1.1797, 1.1811 And 1.1832

On the topside, the market has a precise ladder of reference levels. The first step is the 1.1762–1.1763 region, where recent highs and a key Fib marker converge. A decisive daily close above that band shifts focus to the 1.1779–1.1788 swing zone, which has multiple historical touches and therefore carries genuine supply information. If momentum is strong enough to clear 1.1788, the next extensions sit near 1.1797, then 1.1811, and then 1.1832. With DXY under pressure and US yields trending lower, nothing in the current technical alignment prevents EUR/USD from testing the high 1.17s and possibly the low 1.18s as long as macro conditions do not shift sharply back in favor of the dollar.

US Data Risk: NFP, CPI, Retail Sales And PMIs As Volatility Catalysts

The obvious risk to the bullish scenario is a positive surprise in US data that forces markets to scale back expectations for rate cuts. The delayed Nonfarm Payrolls report, upcoming Consumer Price Index data, Retail Sales and early PMI readings will all directly influence how much easing is priced for 2026. Strong payroll growth, firmer inflation or resilient consumption would argue that the current 58% probability of two cuts by October 2026 is too aggressive, potentially lifting DXY back toward the 98.76–99.24 resistance region and squeezing EUR/USD back toward 1.1700–1.1689. Conversely, weak jobs, soft inflation and slowing spending would reinforce the current dovish curve and likely trigger a clear break through 1.1762–1.1788.

Fed Communication: Hammack, Goolsbee And The Battle Over The Narrative

Verbal guidance from the Federal Reserve is the second major lever. Comments from Fed officials such as Beth Hammack and Austan Goolsbee will either validate or challenge the current market narrative. If they highlight inflation risks, argue that the three cuts already delivered are sufficient, and push back against political pressure for more easing, the dollar can get interim support. If they instead focus on downside risks in the labor market, acknowledge the significance of the 44,000 jump in jobless claims and tolerate market pricing for additional cuts, traders will treat it as confirmation that the dot plot understates the easing cycle. In that case, EUR/USD bulls will be comfortable increasing exposure above 1.17 rather than waiting for a deep pullback.

ECB Meeting, Eurozone Inflation And The Policy Gap With The Fed

On the European side, the upcoming ECB decision is more about maintaining credibility than about radical moves. A straightforward hold, with messaging that current rates are appropriate and that there is no urgency to cut again, reinforces the widening gap between a cutting Fed and a cautious ECB. German HICP running at 2.6% year on year with modest negative monthly momentum gives the ECB room to sit tight without losing face on inflation. A surprise dovish pivot would erode some of the euro’s relative advantage, but current pricing and communication do not signal that kind of shift. As long as investors believe the ECB is closer to the end of cuts than the Fed, the medium-term bias in EUR/USD remains to the upside.

Trading Stance On EUR/USD: Bias Bullish Above 1.1689 With Dip Buys Toward 1.17

Taking the macro drivers and the technical map together, the pair remains a buy-the-dip market rather than a short-the-rally setup. The constructive zone is defined initially by 1.1700–1.1689, where short-term Fib levels, intraday moving averages and prior breakout structures intersect. A deeper, more strategic support band sits around 1.1664–1.1635 at the 50-day and 100-day EMAs. As long as daily closes hold above roughly 1.1689, pullbacks into the 1.17 area are technically aligned with the prevailing trend. Only a sustained break below 1.1660–1.1635, combined with a reversal in DXY back above roughly 99, would signal that EUR/USD buyers have lost control and that the risk profile has shifted.

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