EUR/USD Price Forecast: Extra gains remain on the cards above 1.1590

EUR/USD pushed higher late on Thursday, trading around the 1.1750 area and sitting at two-day highs after the closing bell in European markets. The rebound largely mirrors a renewed pullback in the US Dollar (USD), as investors continue to digest remarks from President Trump at the World Economic Forum (WEF) earlier in the week.

The mood around US–European Union trade has clearly brightened after President Trump softened his tone on the threat of fresh tariffs tied to the Greenland issue. That change in stance has gone down well with markets, lifting risk appetite and giving a helpful boost to the Euro (EUR) and other risk-sensitive currencies.

At the same time, the US Dollar Index (DXY) is still sliding, drifting towards the 98.30 area. Indeed, choppy moves in US Treasury yields across the board and a firm performance in US equities are keeping the pressure on the greenback, reinforcing the more constructive mood elsewhere.

The Fed cuts, but stays cautious

The Federal Reserve (Fed) delivered the December rate cut that markets had fully priced in, but the real signal came from the tone rather than the move itself. A split decision and carefully calibrated language from Chair Jerome Powell made it clear that further easing is far from automatic.

Powell reiterated that inflation remains “somewhat elevated” and stressed the need for clearer evidence that the labour market is cooling in an orderly way. Updated projections barely changed, still pointing to just one additional 25-basis-point cut in 2026, alongside steady growth and only a modest rise in unemployment.

During the press conference, Powell ruled out rate hikes as the base case, but was equally reluctant to hint that another cut is imminent. He also pointed to tariffs introduced under Trump as one of the factors keeping inflation sticky.

The Minutes later underscored how finely balanced the debate remains within the Federal Open Market Committee (FOMC). With divisions still evident, confidence in further easing is waning, and a pause increasingly looks like the default option unless inflation cools more convincingly or the labour market weakens more sharply.

ECB in no rush to move

The European Central Bank (ECB) left rates unchanged at its December 18 meeting, striking a notably calmer and more patient tone. Small upward tweaks to parts of the growth and inflation outlook have pushed expectations for near-term rate cuts further out.

Recent data have helped steady sentiment. Euro area growth has surprised modestly to the upside, exporters have coped better than feared with US tariffs, and domestic demand has offset some of the drag from weak manufacturing.

Inflation dynamics remain broadly consistent with the ECB’s framework. Price pressures are hovering close to the 2% target, with services inflation doing most of the heavy lifting, a pattern policymakers expect to persist.

Updated projections still show inflation dipping below target in 2026–27 as energy prices ease, before gradually drifting back towards 2%. At the same time, officials remain alert to the risk that services inflation could stay sticky, given that wage growth is only cooling slowly.

Growth forecasts were nudged higher as well, reinforcing the sense that the economy is holding up better than many had feared. President Christine Lagarde summed it up by calling exports “sustainable” for now, while stressing that policy decisions will stay firmly data-dependent.

According to the ECB Accounts published earlier on Thursday, policymakers signalled they are in no hurry to adjust rates. Inflation being close to target gives them room to be patient, even as lingering risks mean they must remain ready to act again if needed.

Furthermore, Governing Council (GC) members said they could afford to wait but were careful to stress that patience should not be mistaken for hesitation. Policy is in a “good place” for now, but not on autopilot. Markets seem to have taken the hint, pricing in just over 3 basis points of easing this year.

Positioning: still long, but enthusiasm fades

Speculative positioning continues to favour the Euro, although bullish conviction is starting to thin.

According to Commodity Futures Trading Commission (CFTC) data for the week ending January 13, non-commercial net long positions fell to around 132.6K contracts, the lowest level in six weeks. Institutional players also reduced short exposure, now sitting near 179.8K contracts.

At the same time, open interest has increased for a third straight week, approaching 883.7K contracts, a four-week high, suggesting broader participation even as confidence softens.

What could change the tone

Near term: Preliminary Purchasing Managers’ Index (PMI) releases in Europe and the US should dominate attention into the end of the week, while US–EU trade headlines are also likely to remain a source of near-term volatility.

Risk: A renewed rise in US Treasury yields or a more hawkish shift from the Fed could quickly tilt the balance back towards sellers. A clear break below the 200-day Simple Moving Average (SMA) would also increase the risk of a deeper medium-term correction.

Tech corner

EUR/USD regains traction and remains on track to challenge yearly tops near 1.1770 (January 20). The December peak at 1.1807 (December 24) comes next, exposing a potential test of the 2025 ceiling at 1.1918 (September 17) ahead of the 1.2000 threshold.

Moving south, initial support sits at the key 200-day SMA at 1.1590 ahead of the November floor at 1.1468 (November 5) and the August valley at 1.1391 (August 1).

Additionally, momentum indicators lend support to the case of extra gains in the near term: The Relative Strength Index (RSI) climbs above the 58 level, while the Average Directional Index (ADX) around 20 is indicative of a pretty firm trend.

Bottom line

For now, EUR/USD is being driven far more by developments in the US than by anything coming out of the euro area.

Until the Fed provides clearer guidance on how far it is willing to ease, or the eurozone delivers a more convincing cyclical upswing, further gains are likely to be steady and incremental, rather than the start of a decisive breakout.