EUR/USD Holds $1.1765 as FOMC Minutes Decide Next 110-Pip Move
EUR/USD found its footing during the European session - finally snapping a 4-day losing streak and stabilizing around $1.1765...
Quick overview
- EUR/USD stabilized around $1.1765 after a 4-day losing streak, as traders await the FOMC December meeting minutes.
- The probability of rates remaining unchanged in January has increased to 83.9%, while expectations for another rate cut have decreased.
- Geopolitical tensions related to Ukraine and Russia continue to hinder the Euro's upward momentum despite a softer Dollar.
- Technical indicators suggest that EUR/USD is consolidating, with key support and resistance levels to watch for potential trading opportunities.
EUR/USD found its footing during the European session – finally snapping a 4-day losing streak and stabilizing around $1.1765 as the US Dollar takes a bit of a breather near $1.176. Traders are now sitting back and waiting to see what the FOMC December meeting minutes have in store for us later today – minutes that could give a pretty good idea of how the Federal Reserve views the policy risks ahead in 2026.
Markets are still trying to adjust to the Fed’s December rate cut of 25 basis points, which not only brought the policy range down to 3.50-3.75%, but also wrapped up a total 75bp easing cycle in 2025. The CME FedWatch Tool indicates that the probability of rates staying unchanged in January has jumped to 83.9%, while expectations for another cut have fallen to 16.1% – down from nearly 20% last week.
As a result of this shift, some of the shine has been taken off the Dollar, leaving EUR/USD some breathing room after last week’s wipeout.
Euro caught in a tight spot between Rates and Risk
While a slightly softer Dollar has been helpful, the Euro’s not out of the woods just yet. The ongoing geopolitical jitters linked to Ukraine and Russia are still holding back upside momentum – and keeping risk-sensitive money on the sidelines. This backdrop has meant that even with a better technical setup, EUR/USD has struggled to make any real progress upwards.
At the same time, the fact that the European Central Bank didn’t cut rates in December, and President Christine Lagarde stressed that future decisions depend on the data, is creating a stabilizing force here. That’s in contrast to the Federal Reserve, which has already started easing – and is helping to narrow rate differentials in the Euro’s favour.
For the time being, though, EUR/USD is just bouncing around in a range – with traders reluctant to make any big bets before we get some clearer signals from the Fed.
EUR/USD Technical Picture Still Looking Constructive
On the technical front, EUR/USD is consolidating, rather than rolling over for the count. On the 4-hour chart, the price is still holding above the rising trendline that started in early December, suggesting the bigger-picture uptrend remains intact.
Levels to keep an eye on include:
- 50-EMA support at around $1.1755
- 200-EMA support near $1.1725 – probably won’t take much to get to this one
- Horizontal support at $1.1700 – a simple one to keep in mind
- Resistance zone around $1.1785-$1.1810 – we’ll need to see whether we can actually break through
Momentum indicators are backing this pause – the RSI is sitting in the middle at 50-52, which doesn’t suggest exhaustion – and the tighter price action suggests volatility could return at any moment once we get some clear direction.
What comes next for EUR/USD
Whatever happens next depends on the tone of the FOMC minutes. If they hint that Fed policymakers are leaning more dovish into 2026, that could open the door to another big push upwards.
Trade setup to watch:
- Buy a confirmed break above $1.1810
- Target $1.1875
- And watch out for a stop below $1.1750
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