EUR/USD Price Forecast: Minor support emerges around 1.1750

After EUR/USD couldn't break through the February highs above 1.1900, it looks to have entered a period of consolidation, with prices settling around or just below the 1.1800 level. As long as the critical 200-day SMA around 1.1650 keeps the price from going down, further gains should be on the way.

EUR/USD trades in an inconclusive fashion on Tuesday, faltering just ahead of the 1.1800 resistance zone in a context of marginal gains in the US Dollar (USD), and looking to extend the bid bias seen in the last couple of days.

On the other hand, the US Dollar Index (DXY) surrenders part of its initial move higher, although it manages to cling to humble gains just below the 98.00 barrier, with US Treasury yields advancing in the short end of the curve vs. modest pullbacks on the belly and the long end.

Fed: comfortable, but not committed

The Federal Reserve (Fed) left the Fed Funds Target Range (FFTR) unchanged at 3.50% to 3.75% at its late January meeting. No surprises there. Markets were fully positioned for a hold.

The real shift was in the tone.

Policymakers sounded more comfortable with where the economy stands. Growth is proving more resilient than many had feared and, importantly, the Federal Open Market Committee (FOMC) no longer sees employment risks as deteriorating. Inflation is still described as somewhat elevated, but the sense of urgency has clearly faded.

The decision passed 10 to 2, with two dissenters favouring a 25 basis points cut. That split matters. It shows that while the centre of gravity remains steady, the internal debate is very much alive.

At the press conference, Chair Jerome Powell argued that policy is in a good place and reiterated that decisions will remain meeting by meeting, with no preset path. He downplayed recent inflation surprises, attributing much of the overshoot to tariffs, and stressed that services disinflation continues to make progress. Crucially, no one on the Committee is treating a rate hike as the base case.

The January Minutes reinforced that picture. Most participants supported holding steady. Several suggested that further easing would likely be appropriate if inflation declines in line with expectations, while others warned that hikes could still be warranted if price pressures remain stubborn.

With growth solid and the labour market stabilising, the Fed remains firmly data dependent rather than leaning decisively towards aggressive cuts.

ECB: patience as policy

The European Central Bank (ECB) also left its three key rates unchanged in a unanimous and widely expected decision.

The communication felt steady and disciplined. The medium term outlook continues to point to inflation returning to the 2% target, and recent data have not materially altered that view. Wage indicators appear to be stabilising, although services inflation remains under close scrutiny. The ECB still anticipates a modest dip in consumer prices in 2026.

At her press conference, President Christine Lagarde described risks as broadly balanced. Policy remains agile and data dependent. The Governing Council acknowledged recent foreign exchange moves but judged them to be within historical norms, reiterating that there is no exchange rate target.

Markets are pricing around 7 basis points of easing by year end and broadly expect another hold at the March 19 meeting.

Euro positioning: a crowded tug of war

Positioning in the Euro (EUR) is becoming more intense.

Commodity Futures Trading Commission (CFTC) data show speculative net longs climbed to nearly 174.5K contracts in the week to February 17, the highest level since September 2020.

At the same time, hedge funds and other institutional accounts increased short exposure to around 235.8K contracts, the highest since May 2023. When both longs and shorts rise together, it signals rising conviction on both sides rather than a straightforward bullish extension.

Open interest eased slightly to roughly 916.8K contracts, just below previous record highs. This is not a thin move. It is a genuine battle of narratives.

Net positioning still favours the Euro (EUR), but the build-up in opposing shorts makes the path higher more complicated. The trade is more crowded and more sensitive to incoming macro catalysts.

What to watch now

Near term: the US Dollar remains the dominant driver. Labour market data, inflation releases and geopolitical headlines are likely to dictate the tempo. Meanwhile, the weekly US jobless claims are in focus, though Fed speakers could easily shift the tone.

Risks: a Fed that stays cautious for longer combined with healthy data continues to underpin the Greenback, particularly against an ECB that is effectively in wait-and-see mode. From a technical perspective, a decisive break below the 200 day Simple Moving Average (SMA) would increase the probability of a deeper corrective phase.

Tech corner

In the daily chart, EUR/USD trades at 1.1785. The near-term bias is mildly bullish as spot holds just above the 55-day and 100-day Simple Moving Averages (SMAs), which cluster around 1.1700 and trend slightly higher, while the rising 200-day SMA near 1.1660 underpins the broader uptrend. Price has stabilised after the recent pullback from the early-month highs, keeping the sequence of higher lows intact above the key medium-term averages. The Relative Strength Index (RSI) hovers just below 50, reflecting balanced momentum but not yet signalling downside pressure, while the easing Average Directional Index (ADX) around 20 indicates a consolidative phase rather than a trending reversal.

Initial resistance sits far above the market at 1.2082, with the next caps at 1.2266 and 1.2350, which together define the upper boundary of the broader bullish structure. On the downside, immediate support emerges at 1.1766, guarding the path toward the 200-day SMA area near 1.1660 and the horizontal level at 1.1578. A sustained break below 1.1578 would expose deeper supports at 1.1491, 1.1469 and 1.1392, shifting the bias to more clearly bearish, while holding above 1.1766 would keep buyers positioned to resume the advance toward the 1.2000 hurdle and the 1.2082 resistance.

(The technical analysis of this story was written with the help of an AI tool.)

Bottom line: the Dollar narrative still in charge

EUR/USD is currently being driven far more by the US narrative than by developments in the euro area.

With the Fed’s 2026 rate path still lacking clarity and the euro area yet to deliver a convincing cyclical rebound, upside progress is likely to remain gradual rather than morphing into a clean breakout.

For now, it remains a Dollar story first, Euro story second.