EUR/USD climbs steadily as sentiment improves across global FX

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Euro near resistance

Highlights

- EUR/USD holds most weekly gains as traders maintain strong conviction in a December Fed cut.

- Dollar struggles to build traction despite firmer data, keeping pressure tilted in favor of the euro.

- Technical structure shows the pair pressing into the 1.1580–1.1630 resistance band.

Even so, traders continue to price a December rate cut with conviction, with markets expecting a 0.25 reduction next month. Speculation that Kevin Hassett — a noted policy dove — may replace Jerome Powell as Fed chair has reinforced expectations for further easing through 2026, limiting dollar upside.

That macro backdrop continues to favor the euro, which has also benefited from optimism around progress in Russia-Ukraine peace discussions. While geopolitical momentum remains fragile, any improvement in sentiment tends to weaken demand for safe-haven dollar flows. With the euro holding firm above its recent lows, traders are now shifting attention to whether the pair can break the dense resistance area overhead.

Support holds as euro tests resistance cluster

EUR/USD is stabilizing above a critical support band after spending much of November under pressure. Last week’s rebound from the 1.146–1.15 region marked a strong defense of the 0.382 Fibonacci retracement of the July–October upswing. Buyers absorbed every dip in this zone, and the pair has climbed back into the 1.158–1.1630 resistance band, which is defined by the 20-day EMA at 1.1572, the Bollinger mid-band at 1.1637, and several failed break attempts from earlier this month.

EUR/USD price dynamics (Source: TradingView)

The moving averages reflect a market attempting to shift away from its recent bearish phase. The 20-day EMA has flattened, while the 50-day EMA at 1.1602 sits just above price as the first major barrier to a deeper recovery. The 100-day EMA at 1.1577 has acted as an intraday pivot, with price oscillating around it as traders position ahead of the ECB minutes. A daily close above 1.1630 would be the first convincing sign of renewed bullish traction.

Beyond that, the next major target sits at the 0.618 Fibonacci level at 1.1655, followed by a broader upside checkpoint at the 0.786 retracement near 1.1728. The descending channel that guided price lower since September remains in play, and its upper boundary aligns almost perfectly with the 1.165–1.168 region, making this zone a key inflection point for any potential trend shift.

Fed expectations dominate as volatility returns

Volatility is beginning to expand again after weeks of compression. The Bollinger Bands, which tightened sharply through mid-November, have started to widen as EUR/USD pulls off its lows. Price has reclaimed the lower band and continues to work toward the midpoint, a pattern that often precedes a stronger directional move.

Fundamentally, the dollar’s inability to gain traction even with firmer economic data underscores how deeply rate-cut expectations are embedded in market psychology. The eurozone’s modest improvement in consumer sentiment and stable inflation outlook has not generated major upside, but it has prevented fresh lows and helped support the current rebound. Diverging monetary expectations now favor the euro, with investors watching the ECB minutes for clues on forward policy guidance.

The near-term outlook hinges on whether EUR/USD can reclaim the 1.163 barrier. A rejection would likely push the pair back toward the 1.152–1.155 cluster, where support remains firm. A breakout above 1.1630, however, would open the path toward 1.1655 and then 1.1728. For now, the pair maintains a cautiously bullish tone, supported by a strong defense of the 1.15 region and an increasingly dovish narrative around the Federal Reserve.

In earlier coverage, we highlighted the importance of the 1.146–1.15 support band, noting that a clean defense of this zone could provide the foundation for a broader rebound. This week’s price action confirms that buyers continue to anchor bids near this region, reinforcing its significance ahead of the ECB minutes and the December Fed meeting.

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