EUR/USD Price Forecast: Next on tap comes 1.1700
- EUR/USD picks up extra pace and approaches the 1.1700 hurdle midweek.
- The US Dollar comes under increasing selling pressure, receding to multi-week lows.
- The US ADP report and the ISM Services PMI missed expectations in November.
EUR/USD keeps its bullish tone well in place for yet another day on Wednesday, this time advancing to the proximity of 1.1700 the figure and flirting at the same time with new seven-week tops.
The pair’s strong performance comes on the back of the persistent move south in the US Dollar (USD), with the US Dollar Index (DXY) breaking beow the keuy support at 99.00 to reach fresh five-week troughs amid declining US Treasury yields across different maturity periods.
The US Dollar remains under pressure as traders stick with the idea that the Federal Reserve (Fed) could deliver another 25 basis points rate cut at its December 10 meeting. And with expectations leaning toward a more dovish Fed stance in early 2026, the buck continues to lack support.
Washington’s budget déjà vu
Yes, the US government is open again after a 43-day shutdown, but there’s little relief in DC. Lawmakers only pushed the deadline out to January 30, meaning we’re set up for another shutdown showdown in just a few weeks.
The political dynamics were also flipped this time. Instead of Republicans demanding deep cuts, Democrats held their ground, arguing that the standoff helped shine a light on surging healthcare insurance costs affecting roughly 24 million Americans. Republicans fired back that the shutdown was costly and counterproductive, from delayed benefits to unpaid federal workers, all while the national debt barrels toward $38 trillion and continues to rise by around $1.8 trillion a year.
In short: Fiscal tensions are nowhere near resolved.
Fed: Easing, but not racing
The Fed did exactly as expected on October 29: A 25bps rate cut plus a modest restart of Treasury purchases to keep funding markets calm. That puts the Fed Funds Target Range (FFTR) at 3.75%–4.00% after a 10–2 vote.
Chair Jerome Powell was quick to dampen any excitement: This was a precautionary trim, not the start of a rapid easing cycle. The Committee remains divided, and Powell cautioned that a December cut is not guaranteed.
The Minutes drove the message home: Most policymakers supported a small cut, but several warned about easing too fast with inflation still sitting above the Fed’s 2.0% objective.
Markets? Still leaning the other way. Pricing shows a little over 86% odds of another cut next week and more than 88 basis points of easing through the end of 2026.
ECB: Cruising in neutral
Across the Atlantic, the European Central Bank (ECB) kept its policy rate unchanged at 2.00% for a third straight meeting. With inflation and growth close to where policymakers want them, and 200bps of cuts already delivered this year, there’s simply no rush to adjust again.
President Christine Lagarde acknowledged that global risks feel a touch calmer — especially with softer US-China friction, but stressed that uncertainty remains high.
The latest Accounts reaffirmed a broad consensus inside the ECB: no further easing is needed right now.
Markets agree: December 18 looks like a straightforward hold, with only tiny tweaks priced through 2026.
Tech Corner
EUR/USD keeps its multi-day positive streak well and sound, trading at shouting distance of the key barrier at 1.1700, while leaving the door wide open for the continuation of the current upside momentum.
Further north comes the 1.1700 round level, while a break above this region should put the weekly high at 1.1728 (October 17) back on the radar, prior to the October ceiling at 1.1778 (October 1).
On the downside, the loss of the weekly trough at 1.1491 (November 21) could spark a deeper move to the November floor at 1.1468 (November 5), seconded by the relevant 200-day SMA at 1.1449. If the pair breaches below the latter, it could spark a revisit to the August base at 1.1391 (August 1) before the weekly low at 1.1210 (May 29) and the May valley at 1.1064 (May 12).
Looking at the broader picture, the constructive view in the pair remains unchanged while above its critical 200-day SMA. Additionally, near-term momentum indicators seem to be supporting the case for extra gains. On this, the Relative Strength Index (RSI) climbs to nearly the 63 level, suggesting that extra advances remain on the cards. On the not-so-bright side, the Average Directional Index (ADX) just above the 12 mark indicates that the current trend remains juiceless.
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Quick take
EUR/USD is moving higher, but without much excitement behind it. Until the Fed clearly commits to easing or confidence in Eurozone growth improves, upside progress will likely remain gradual rather than dramatic. For now, the pair is still taking most of its cues from the US Dollar side of the story.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
