EUR/USD holds near $1.159 as Fed repricing and ECB stability drive a three-session recovery

Highlights

- EUR/USD steadies near 1.1590 as aggressive Fed cut expectations weaken the dollar.

- Buyers defend 1.1500–1.1530, reclaiming the 0.382 Fib at 1.1585 with improving momentum.

- A breakout above 1.1600–1.1620 would open the path toward 1.1654 and 1.1728.

With the CME FedWatch Tool now assigning an 87 percent probability to a December rate cut, the dollar’s recent recovery looks fragile. That shift has allowed the euro to rebound from its November lows even as investors weigh uncertainties in the broader risk environment.

Technical structure shows improving momentum as buyers reclaim key levels

The daily chart shows the pair recovering above the 0.382 Fibonacci retracement at 1.1585, a level that acted as a pivot throughout October and November. This move emerged after EUR/USD defended the broader support zone between 1.15 and 1.153, an area reinforced by the 200-day EMA near 1.1426. Buyers stepped in ahead of deeper downside exposure, forming a higher low and establishing a clean reversal candle that initiated the current rally.

EUR/USD price dynamics (Source: TradingView)

Price now trades above the 20-day moving average and is testing the 50-day EMA at 1.1601, the first barrier that must break for the recovery to develop momentum. The down-sloping channel from the early October peak is still intact, but EUR/USD has broken the inner trendline of that structure, signaling that the selling pressure dominating most of November has eased.

A close above 1.16–1.162 would give buyers clearer control and likely open the path toward the 0.5 Fib at 1.1654, which capped multiple intraday attempts earlier in the month. Beyond that, the 0.618 Fib at 1.1728 stands as the next major waypoint, lining up with a dense supply region defined by repeated failures in September and October.

Macro catalysts shift decisively toward euro strength

The fundamental backdrop has turned materially more supportive for EUR/USD. Markets have pivoted toward a U.S. easing cycle after the probability of a December cut surged from 39 percent to more than 87 percent in the span of one week. This rapid repricing accelerated on speculation that Kevin Hassett may become the next Fed chair, reinforcing expectations for a policy stance more aligned with President Trump’s preference for lower rates.

This narrative has continued to pressure the dollar’s yield advantage and has given the euro a cleaner upside runway, as long as the rate-cut outlook remains intact.

On the European side, the latest ECB Minutes signaled that policymakers view the current stance as “in a good place.” Officials expressed comfort with holding rates steady, and several argued that no additional easing would be necessary if inflation and activity stay aligned with September projections. The lack of urgency for further cuts has created a mild divergence between the ECB and a Fed that is rapidly shifting toward accommodation.

The RSI near 50 reflects a neutral but improving momentum profile. There is no overbought risk, and recent higher lows in the indicator reinforce the bullish case as EUR/USD approaches the 1.16 ceiling. A decisive close above that level would validate the breakout from the descending channel and likely attract momentum-based flows across short-term positioning.

For now, EUR/USD sits at a crossroads shaped by fundamental tailwinds and a recovering chart. The edge remains with buyers if markets maintain conviction in aggressive Fed-cut expectations. A failure at 1.16, however, would return the pair to consolidation, with 1.153 and 1.15 standing as key downside checkpoints in the near term.

Our earlier coverage highlighted the same dynamic: EUR/USD was attempting to build a base above the 1.15 region while awaiting a catalyst from the Fed. This week’s sharp repricing has validated that setup and allowed the pair to retest the 1.16 band, the level we previously identified as the gateway to a broader recovery.

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