EUR/USD Price Forecast: Minor contention emerges near 1.1450

EUR/USD couldn’t find much direction at the start of the week, hovering around the 1.1550–1.1560 band after once again running out of steam near the key 1.1600 barrier.

The pair’s absence of a clear direction comes amid the equally inconclusive tone in the Greenback, with the US Dollar Index (DXY) chopping between small gains and losses near 99.60, even as Treasury yields tick slightly higher across the curve.

Interestingly, the pair’s price action comes despite an overall improvement in market sentiment, as optimism grows that Washington may finally be close to ending the 40-day US government shutdown in the next few days.

US shutdown: light at the end of the tunnel?

The US Senate made progress on Sunday toward ending the record 40-day shutdown, a standoff that has kept federal workers unpaid, disrupted food aid, and caused chaos at airports.

In a key procedural vote, senators moved forward with a House-approved bill that would keep the government funded through January 30 and include three full-year spending measures. It’s an important step, though not the final one: once the Senate passes the amended version, it still needs to go back to the House of Representatives before heading to President Donald Trump’s desk for signature, a process that could take several more days.

The breakthrough followed a compromise between Republicans and a handful of Democrats who had resisted their party’s leadership. As part of the deal, Republicans agreed to hold a December vote on extending Affordable Care Act (ACA) subsidies, a key Democratic demand, as the subsidies help lower-income Americans afford private health insurance.

The motion to advance the bill passed 60–40, just enough to overcome a filibuster. It’s a cautious sign that Washington might finally be edging closer to reopening the government, and giving both markets and federal workers some relief.

Trade truce brings a breather

After weeks of tension, Presidents Donald Trump and Xi Jinping met in South Korea recently, giving markets a brief moment of calm. Their meeting ended with an agreement to pause the US–China trade war once again.

Following two hours of talks, Trump said the US would roll back some tariffs, while China agreed to restart soybean imports, maintain rare earth exports, and cooperate more closely on fentanyl trafficking.

Beijing later confirmed that both sides had agreed to extend their trade truce for another year, a modest but welcome step toward stability after months of uncertainty.

The prudent Fed

The Federal Reserve (Fed) struck a balanced tone at its October 29 meeting, cutting rates by 25 basis points and resuming modest Treasury purchases to ease funding pressures in money markets.

The decision, which passed by a 10–2 vote, brought the target range down to 3.75%–4.00%, exactly as markets expected. Policymakers framed the move as a safeguard against a softening labour market, rather than the start of a new easing cycle.

In his press conference, Fed Chair Jerome Powell acknowledged divisions within the Federal Open Market Committee (FOMC) and cautioned investors against assuming another cut in December.

Markets are now pricing in just over 15 basis points of additional easing by year-end and around 80 basis points by the end of 2026. However, these expectations could shift once the government reopens and a backlog of delayed US data, including the all-important Nonfarm Payrolls, starts rolling in.

ECB comfortable on the sidelines

Across the Atlantic, the European Central Bank (ECB) kept rates steady at 2.00% for a third straight meeting last week and gave little away in terms of new guidance. For now, policymakers seem content with growth and inflation hovering near target, a relatively calm position compared with other major central banks.

After cutting rates by two percentage points earlier this year, the ECB has clearly moved into wait-and-see mode.

President Christine Lagarde noted that global risks have eased somewhat following the latest trade developments and Washington’s partial tariff rollback, but she also stressed that uncertainty remains high.

Market pricing points to a touch over 8 basis points of additional easing by the end of 2026, suggesting traders believe the ECB’s rate-cut cycle is essentially complete for now.

Tech corner

Further recovery in EUR/USD remains unconvincing, to say the least. Indeed, the 1.1600 region has proven to be quite a tough nut to crack for now.

Bulls initially target the weekly high at 1.1728 (October 17), a region underpinned by the transitory 100-day and 55-day SMAs in the 1.1660–1.1670 band. Once cleared, the pair is expected to challenge the October top at 1.1778 (October 1). Further up comes the 2025 ceiling of 1.1918 (September 17), ahead of the key 1.2000 yardstick.

On the other hand, the November base at 1.1468 (November 5) emerges as the immediate contention, prior to the August floor at 1.1391 (August 1), and the key 200-day SMA at 1.1350. A deeper retracement should not find any support of note prior to the weekly trough at 1.1210 (May 29). If losses accelerate from here, the May valley at 1.1064 (May 12) is expected to come next.

Meanwhile, momentum indicators seem to favour further losses in the short-term horizon: the Relative Strength Index (RSI) looks stable just below the 45 level, while the Average Directional Index (ADX) near 18 indicates a modestly strong trend.

What’s next

EUR/USD looks stuck in consolidation mode, waiting for a catalyst strong enough to shake it out of its range: a shift in the Fed’s tone, renewed appetite for risk assets, or stronger demand for Eurozone bonds at the expense of US ones could all tilt the balance, but until then, it’s likely the Greenback’s own swings will continue to dictate the mood around the pair.