EUR/USD holds near $1.163 as ECB decision and Fed dynamics set stage for next move

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EUR/USD ECB and Eurozone data

Highlights

- EUR/USD holds near 1.163 as the dollar corrects lower after the Trump–Xi meeting.

- Traders await Eurozone GDP and German HICP data before the ECB announcement.

- Technical chart shows resistance near 1.1685, with downside risk toward 1.154.

Still, traders remain cautious ahead of the European Central Bank’s rate decision and upcoming Eurozone data that could determine the next leg for the pair.

Technical picture shows fragile rebound

On the 4-hour chart, EUR/USD continues to trade below its descending trendline from September highs, a structure that has consistently capped upside moves. The pair remains confined under the 0.382 Fibonacci retracement at 1.1684, while a cluster of EMAs — the 20-, 50-, and 100-period — between 1.1632 and 1.1642 acts as immediate resistance.

EUR/USD price dynamics (Source: TradingView)

The 0.236 retracement at 1.1628 is now a pivotal level. A close below this point would signal renewed bearish pressure and expose the October floor near 1.154. A successful break above 1.1685, however, would shift momentum toward 1.177 and 1.1835, aligning with the 0.618 and 0.786 Fibonacci retracements respectively.

Momentum readings highlight a market in wait mode. The RSI sits just under the neutral 50 line, reflecting indecision as traders hesitate to commit ahead of key central bank and macro announcements. Similar RSI setups earlier this month preceded short-lived rebounds, suggesting that buyers are active but not dominant.

Macro drivers set to shape volatility

The ECB is widely expected to hold its deposit facility rate steady at 2%. President Christine Lagarde’s tone during the post-meeting press conference will likely determine the euro’s short-term direction. Any acknowledgment of lingering inflation concerns or slower growth could reinforce the ECB’s cautious stance and weigh on the currency.

In parallel, preliminary Eurozone GDP and German HICP data are expected to provide a near-term barometer of regional health. A stronger print could offset some of the ECB’s dovish bias, though a miss would amplify downside risks for the euro.

Across the Atlantic, the Federal Reserve’s “risk management” rate cut earlier this week — a 25-basis-point reduction, has temporarily curbed dollar strength. However, Chair Powell’s reluctance to commit to another cut in December continues to support the greenback’s underlying tone. The U.S. Dollar Index remains near 99, leaving limited scope for sustained EUR/USD rallies without fresh positive catalysts from Europe.

Outlook

In the short term, EUR/USD sits at a key technical junction between the 1.1628 support and descending trendline resistance at 1.1685. A decisive close above 1.1659 could open the path toward 1.17–1.177, while failure to hold above 1.1620 may trigger a retreat toward 1.154–1.156.

As previously discussed, the euro’s trajectory remains dictated less by domestic momentum and more by dollar sentiment and policy divergence. With both the Fed and ECB meetings now converging with major data releases, traders should brace for heightened volatility through the end of the week.

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