• EUR/USD price analysis suggests a sluggish move dominated by short-term US yields.
• French political chaos offsets the positive economic factors in the Eurozone in the near term.
• Markets remain sidelined as the key Fed decision looms this week.

The EUR/USD pair trades with a softer tone as short-term US yields dominate market sentiment, overshadowing the supportive factors in the Eurozone. The price briefly gained from Monday’s lows of 1.1615, bouncing to the 1.1650 area. However, the overall volatility remains contained as traders avoid aggressive positioning ahead of the Fed decision on Wednesday.

Despite the upbeat medium-term fundamentals, such as falling European energy prices and Germany’s EUR 52 billion military spending package, the shared currency remains vulnerable to US rate dynamics and renewed political uncertainty in France.

According to ING’s Chris Turner, the remarks from ECB official Isabel Schnabel failed to gain traction as short-dated US yields dominated the markets. However, Turner also noted that the broader Eurozone backdrop is turning further positive for the Eurozone. Germany’s fiscal stimulus is expected to boost growth in the second half of 2026, while tumbling oil and natural gas prices continue to ease pressure on the bloc’s economy and inflation outlook. He also pointed out that long-dated yields are expected to rise amid Dutch pension reforms, which could inject volatility into European bond markets at the beginning of 2026.

Still, the euro faces numerous downside risks, as recent French political tensions re-emerge, especially if the parliament fails to pass the social security budget. UOB analysts anticipate that the euro’s momentum is gradually fading, lacking follow-through.

On the other hand, market participants remain cautious in the wake of the FOMC rate decision, with futures markets assigning a 90% probability of a 25-basis-point rate cut. The move is largely priced in; the tone of the policy statement and the dot plot are crucial to watch.
 

EUR/USD Key Events to Watch

The ADP Employment Change and JOLTS Job Openings reports may exhibit short-term volatility, particularly given that November’s Nonfarm Payrolls are being delayed until next week. Both sides of the pair lack conviction. Hence, EUR/USD is likely to remain range-bound until fresh guidance emerges from the Federal Reserve.
 

EUR/USD Price Technical Analysis: Bullish Pin Bars Under 20-MA
 

(Click on image to enlarge)

EUR/USD 4-hour chart
 

The 4-hour chart for the EUR/USD shows neutral momentum. The price remains trapped between the 50-period MA support and 20-period MA resistance. Meanwhile, the RSI remains flat near the 50.0 level.

The bullish pin bars suggest a fair buying pressure, but markets await a catalyst to trigger a breakout. In the event of a bullish breakout, the price could break above 1.1650 and aim for 1.1720. On the other hand, bears could aim for 1.1600 ahead of 1.1550.

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