EUR/USD Price Forecast: Remains confined in a familiar range; bears not ready to give up yet

The EUR/USD pair continues with its struggle to attract any meaningful buyers and trades with a mild negative bias through the early European session on Friday. The shared currency is undermined by expectations that the European Central Bank (ECB) will adopt a more dovish stance and lower borrowing costs three or four times in 2025. The bets were reaffirmed by the Accounts of the December 11-12 ECB meeting, which showed that further policy easing was likely coming amid weakening price pressures. Adding to this, ECB Governing Council member Yannis Stournaras said earlier this Friday that policy should continue with a series of rate cuts at the next meetings.

Moreover, a rise in German core annual inflation raised worries about stagflation in the Eurozone's largest economy – that could get worse if trade tensions escalate – and further dents sentiment surrounding the Euro. Apart from this, the emergence of some US Dollar (USD) dip-buying exerts some pressure on the EUR/USD pair and contributes to the intraday negative bias.  Investors now seem convinced that the Federal Reserve (Fed) will pause its rate-cutting cycle on the back of rising speculations that US President-elect Donald Trump's policies would stoke inflation. This, in turn, assists the USD in stalling this week's corrective slide from over a two-year top. 

Meanwhile, the US Producer Price Index (PPI) and Consumer Price Index (CPI) released this week pointed to signs of abating inflation, suggesting that the Fed may not exclude the possibility of rate cuts by the end of this year. This has been a key factor behind the recent sharp fall in the US Treasury bond yields, which might hold back the USD bulls from placing aggressive bets and support the EUR/USD pair. Investors now look to the final Eurozone CPI print ahead of the US housing market data and Industrial Production figures later during the North American session. Nevertheless, the EUR/USD remains on track to end in the green for the first time in seven weeks.

EUR/USD 4-hour chart

Technical Outlook

From a technical perspective, the weekly swing high, around the 1.0355 area is likely to act as an immediate hurdle, above which the EUR/USD pair could aim to reclaim the 1.0400 mark and climb further towards the 1.0435 region. The latter coincides with the monthly peak touched last week and should act as a key pivotal point. A sustained strength beyond will suggest that spot prices have formed a near-term bottom and pave the way for some meaningful recovery.

On the flip side, weakness below the 100-hour Simple Moving Average (SMA), around the 1.0275 area, is likely to find some support near the 1.0245-1.0240 region. Some follow-through selling could drag the EUR/USD pair to the 1.0200 mark and expose over a two-year low, around the 1.0180-1.0175 area touched on Monday. Failure to defend the said support levels would set the stage for an extension of a multi-month-old downtrend and make spot prices vulnerable to slide towards the 1.0100 mark.