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

EUR/USD ticks lower in a three-day-old range amid the emergence of some USD buying.
The divergent ECB-Fed policy expectations continue to act as a headwind for the major.
Traders now look to the final Eurozone CPI print for some impetus ahead of the US data.

Haresh Menghani FXStreet

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.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.