• The EUR/USD forecast remains bullish, with a recent pullback triggered due to profit-taking.
• The Fed’s dovish path limits the euro’s losses, supporting a dip-buying trend in the EUR/USD.
• FedSpeak and next week’s US NFP could provide more clarity to the markets.

The EUR/USD marked a 10-week high near 1.1750 on Thursday before retreating mildly in today’s Asian session as the US dollar staged a rebound. The pullback came after two solid sessions for the pair, which followed the Fed rate cut and dismal US jobless claims data, reinforcing dollar weakness.

The immediate correction suggests profit-taking and stabilization of the greenback, but the broader perspective remains euro-supportive, as the Fed is expected to continue easing next year.

The Federal Reserve delivered its third 25 bps rate cut of 2025 on Wednesday, lowering the benchmark range to 3.50% – 3.75%. Although the committee remained split, the statement tempered expectations of further easing. However, the market participants viewed Powell’s tone as less hawkish, acknowledging the downside risks in the labor market. This, combined with Thursday’s downbeat US jobless claims data with a rise of 44,000, reinforced the view that labor markets are cooling. The Fed’s dovish tilt seems justified, pushing the Dollar Index (DXY) towards a 7-week low near the 98.00 area.

Political noise is also keeping the dollar on the back foot, as renewed speculation about Fed independence has unsettled investors. The White House officials’ insistence on further rate cuts continues to weigh on the greenback. This has drawn the market’s attention to Kevin Hassett, widely seen as a potential new Fed Chair, who is considered rate-friendly. According to the CME FedWatch Tool, the markets are pricing in a 58% probability of two rate cuts by October 2026, well above the Fed’s dot plot.

From the Eurozone, the ECB is expected to hold in the December meeting, pointing to the potential end of the easing cycle. ECB President Lagarde and other policymakers have reiterated that the current situation seems reasonable and requires no further cuts in the near term. This ECB-Fed divergence continued to favor dip buying in EUR/USD.
 

EUR/USD Key Events Ahead

The near-term direction of the pair will depend on US data. Traders will keep an eye on comments from Fed Cleveland’s President Beth Hammack and Chicago’s President Goolsbee later today. However, the key catalyst will be the NFP data due next week.
 

EUR/USD Technical Forecast: Bulls in the Overbought Zone
 

(Click on image to enlarge)

EUR/USD 4-hour chart
 

The EUR/USD 4-hour chart displays two significant spikes, indicating intense buying pressure. Though the RSI is now in the overbought zone, the bias remains tilted to the upside. The key moving averages, stacking one above the other, also support the upside.

The key resistance for the pair emerges at 1.1800, while the immediate support lies at 1.1700, ahead of 1.1650 and 1.1600. The prices could consolidate here and might correct lower to attract more buying.

More By This Author: