EUR/USD Price Forecast - Eur Pulls Back From 1.20 But Bullish Structure Holds Above 1.19

EUR/USD: Warsh shock tests 1.19 but the bullish structure is still alive

Macro shock: Kevin Warsh revives the US Dollar without killing EUR/USD

Kevin Warsh’s nomination as the next Fed chair has given the USD its first real relief rally in weeks. After trading at a four-year low, the Greenback found buyers and helped drag EUR/USD off the 1.2000–1.2080 zone back toward 1.1900–1.1950. Markets read Warsh as a more traditional central banker than some feared, which reassures investors about Fed independence and makes ultra-dovish scenarios less likely. That shift alone justifies a stronger USD in the very short term and explains why the pair is no longer one-way up.

US drivers for EUR/USD: shutdown averted, DXY stabilizes, PPI in focus

Dollar positioning is also responding to Washington. A bipartisan deal removed the immediate threat of a U.S. government shutdown, a key political tail risk that had been weighing on the USD. With that risk off the table, traders were willing to cover dollar shorts. At the same time, the US Dollar Index (DXY) is holding around 96.5 after sliding from the 98.90–99.00 region, still inside a broader downward channel but no longer in free fall. Into this backdrop, markets are watching December PPI with expectations for headline to cool from 3.0% to roughly 2.7% and core from 3.0% to about 2.9% year-on-year. Any upside surprise would add fuel to the dollar bounce and keep EUR/USD pinned closer to 1.1900 rather than 1.2000 in the near term.

Euro fundamentals behind EUR/USD: growth and inflation are not collapsing

The move lower in EUR/USD is not driven by Eurozone weakness. On the contrary, the bloc has printed better-than-feared data. Eurozone Q4 GDP grew 0.3% quarter-on-quarter and 1.4% year-on-year, beating consensus of 0.2% and 1.2%. Germany surprised on the upside with 0.3% QoQ after flat growth the previous quarter and 0.4% YoY versus 0.3% before. Inflation is sticky rather than soft: preliminary German HICP for January came in at -0.1% MoM, but annual inflation accelerated to 2.1% YoY, above the 2.0% forecast and the prior 2.0%. Those numbers support the idea that the euro’s strength has a macro backbone, even if today’s pullback makes it look less invincible.

ECB concerns about EUR strength cap the topside in EUR/USD

What is weighing on the single currency is not data but policy signalling. As EUR/USD pushed through 1.20 and briefly flirted with 1.2080–1.2085, voices inside the ECB started to warn that a quickly appreciating euro threatens export competitiveness and increases downside risks to inflation. That rhetorical pushback is important: if more officials hint at rate cuts or a slower normalization path, the market will be less willing to chase EUR/USD higher on good data alone. For now, those comments do not break the uptrend but they do argue for a ceiling above 1.20–1.21 unless U.S. data weakens again.

Short-term tape on EUR/USD: 1.1900–1.1950 becomes the pivot zone

On the day, EUR/USD is trading roughly around 1.1920–1.1930, down about 0.3–0.4%, after rejecting the 1.2000 handle and the 1.2080 multi-year high. The pair dipped below 1.1900 in Asian trade, tested that area, and then bounced about 20–30 pips higher. Bulls are currently defending the 1.1890–1.1920 band, while bears are leaning against 1.1960–1.2000. This is now the key intraday battlefield: hold above 1.1890 and the recent breakout structure remains intact; lose it and the correction extends toward deeper supports.

Intraday technicals on EUR/USD: 1.1890, 1.1830 and 1.1730 define the downside path

The short-term technical picture has shifted from one-way bullish to corrective but not yet bearish. On the 1-hour and 4-hour charts:
The pair has slipped below the 100-hour SMA, a clear warning that upside momentum has cooled.
The 38.2% Fibonacci retracement of the latest leg higher sits around 1.1890–1.1892 and is acting as first support.
Below that, the 50% retracement comes in near 1.1830–1.1832, and deeper down the January 23 low and prior swing support cluster around 1.1730.
Momentum indicators confirm the loss of steam: the MACD histogram has rolled below zero with expanding negative bars, and the RSI has dropped into the low-40s on intraday frames, edging below the 50 line. That combination signals fading upside rather than an outright trend break. A clean daily close under 1.1890 would open the door toward 1.1830, while holding above keeps the pullback contained.

Trend structure on EUR/USD: moving averages and RSI still point higher

Step back to the daily chart and the structure is still constructive. Price is trading above both the 15-day and 20-day moving averages, which are pointing upwards and functioning as dynamic support on pullbacks. Each dip toward these averages in recent weeks attracted fresh buyers rather than follow-through selling. The 14-day RSI has eased back from overbought territory into the low-60s, which is consistent with a healthy reset in an uptrend, not a topping pattern. There is no clear bearish divergence; momentum has normalised, not reversed. As long as EUR/USD stays above the 1.1830 region and those short-term averages, the medium-term bullish bias remains the dominant force.

Key level map for EUR/USD: where bulls and bears are positioned now

The current landscape for EUR/USD can be distilled into a few critical zones:
Immediate support: 1.1890–1.1900, combining the 38.2% Fib of the latest advance and recent intraday lows from January 28–29.
Next downside level: 1.1830–1.1832, the 50% Fib and an important intermediate support if 1.19 gives way.
Deeper floor: 1.1730 area, a prior swing low and reference point for a full corrective leg without breaking the broader uptrend.
First resistance: 1.1965–1.1970, close to the 23.6% Fib at 1.1967 and the first area where sellers will likely re-emerge.
Psychological and structural cap: 1.2000, with the recent high near 1.2030.
Major ceiling: the spike high around 1.2080–1.2085, the strongest resistance in the current structure and the level the market needs to clear to re-ignite a trend leg higher.
Bulls are buying dips into 1.1900 with stops mostly clustered below 1.1830, while bears are fading strength in the 1.1960–1.2000 band, betting that dollar relief and ECB jawboning can drive at least a deeper retracement.

Strategic view on EUR/USD: bias remains bullish, buy-the-dip while above 1.1830

Putting the macro and technicals together, the directional call is clear. Warsh’s nomination, the avoided U.S. shutdown and the upcoming PPI print justify a stronger USD in the short term, which is exactly what the move from 1.2080 to near 1.1900 reflects. However, Eurozone growth at 0.3% QoQ and 1.4% YoY, German GDP at 0.3% QoQ, and German inflation at 2.1% YoY do not support a bearish narrative for the euro. The pair is still trading above key moving averages, the daily RSI remains in bullish territory, and the structure of higher highs and higher lows has not been broken.
On that basis, the stance on EUR/USD is bullish with a buy-the-dip bias, not neutral and not outright bearish. Dips into the 1.1900 area, and even into the 1.1830 zone if the correction extends, are more likely to attract strategic buying than mark the start of a sustained downtrend—unless the pair starts closing decisively below 1.1830 and the macro narrative flips in favour of a much stronger, persistent USD.

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