EUR/USD is currently positioned around 1.1630, lingering just below the 1.1655 high, as the market remains confined within a seemingly tight framework that conceals increasing pressure. The breakout above 1.1610, which had previously limited every rally throughout October, now serves as the pivotal point distinguishing short-term momentum from the medium-term trend. The pair has experienced eight consecutive sessions of upward movement; however, it has yet to surpass the weekly resistance at 1.1641. This level is crucial in determining if the rebound will evolve into a more extensive trend continuation or if it will falter and enter a phase of compression. The Eurozone’s GDP remained steady at 0.2%, indicating that the region successfully sidestepped contraction in the most recent quarter. Additionally, year-on-year growth increased to 1.4%, up from 1.3%. The most significant positive deviation was observed in the trade surplus, which skyrocketed to €19.4 billion from €1.9 billion, a substantial shift that typically bolsters the EUR universally. Industrial production softened at 0.2% compared to the anticipated 0.7%, and French labor data displayed weakness; however, the market exhibited no significant response. The movement of EUR/USD is influenced by uncertainty surrounding the USD rather than the performance of the Eurozone. The subdued response to the Eurozone misses indicates that traders are not assessing the pair based on local fundamentals.
The shutdown resulted in the loss of over a month’s worth of U.S. data releases. The absence of CPI, NFP, PCE, retail sales, JOLTS, and sector indicators has resulted in markets functioning without the necessary anchors to assess the Fed’s December decision. Federal Reserve officials sought to influence market sentiment through their recent speeches: Mussalem highlighted ongoing inflation risks, Hammack contended that current policy is “barely restrictive,” while Kashkari declined to support a rate cut. In typical circumstances, this unified hawkish sentiment would strengthen the Dollar. Instead, EUR/USD remained above 1.1600 as traders are hesitant to establish long-USD positions in the absence of concrete data. The Dollar is not weak; conviction surrounding it remains stagnant. The EUR appreciated by 0.25% against the GBP and 0.24% against the AUD, while it depreciated by 0.20% versus the JPY and 0.45% versus the CHF. This pattern indicates that the rise in EUR/USD is primarily due to the hesitation of the USD. The Euro is not experiencing widespread purchasing activity. Safe-haven currencies are showing stronger performance compared to the Euro, whereas growth-sensitive currencies are aligning with the EUR as risk appetite sees an uptick. The outcome reflects a pair influenced not by Eurozone metrics, but rather by worldwide sentiment and the lack of USD drivers.
The EUR/USD pair has surpassed the descending channel observed in October and has transitioned into an ascending micro-channel, with support anchored at 1.1610. The RSI on the 4-hour chart approaches overbought levels following eight consecutive bullish sessions, marking a notable streak for EUR/USD. The MACD is showing signs of flattening, indicating that momentum could decelerate prior to the next phase. Resistance is observed at 1.1670, corresponding to the dual top from October 28–29, with the next level at 1.1730, which reflects the high from October 17. The weekly resistance level at 1.1641 continues to serve as the key decision point in the near term. Key levels at 1.1747–1.1775, marked by the yearly high-close range and a significant Fibonacci cluster, will dictate if EUR/USD shifts into a wider upward trend targeting 1.1917–1.2019. Short-term support is at 1.1610, with the next level at 1.1575, which corresponds to the low from November 12. Significant structural support is observed within the range of 1.1530 to 1.1540. The critical zone is established between 1.1497 and 1.1537, influenced by the highs from 2020 and 2022, as well as the 78.6% retracement of the rally observed in July. EUR/USD reached an intraday high of 1.1469 last week but did not manage to close beneath 1.1497, which has initiated the ongoing recovery. As long as the pair remains above 1.1537, the likelihood continues to favor upward movement. Equities experienced a rally following the conclusion of the shutdown, which in turn propelled EUR/USD higher. The Euro aligned with technology, cyclical sectors, and overall risk metrics, indicating that sentiment—rather than regional economic conditions—drives the currency pair.
The EUR/USD pair has emerged as an indicator of traders’ willingness to sidestep USD risk amid the current data blackout. Until the U.S. releases data, this trend will prevail. The Fed funds curve illustrates this uncertainty, indicating a near 50% likelihood of a rate cut in December. Despite the weak data from the Eurozone, the EUR/USD remained resilient as market sentiment and relative interest rate expectations took precedence over local fundamentals. Consumer Price Index, Non-Farm Payroll, Personal Consumption Expenditures, retail sales, and housing reports could all decline within a short timeframe. The EUR/USD pair has the potential to fluctuate between 80 and 120 pips based on a single CPI release. When several key datasets are released at the same time, the pair can fluctuate between 250 and 350 pips within a matter of days. Current positioning indicates that traders are steering clear of directional USD bets in anticipation of this macro flood. The current compression explains why EUR/USD remains within the range of 1.1580–1.1680, even amid significant macro divergence. As the data starts to arrive, expect volatility to disrupt the range significantly. EUR/USD has recovered over 1.6% from the low of 1.1469, successfully breached its descending channel, maintained the 1.16 area, and is nearing several resistance levels. The Dollar Index stands at 99.20, showing signs of weakness even in the face of hawkish commentary and disappointing data from the UK and Eurozone. The observed divergences indicate that the direction of the pair is influenced more by macroeconomic uncertainty than by fundamental beliefs. Considering the technical framework, Eurozone stability, USD indecision, and support robustness, the position is a tactical hold with a bullish inclination. Potential upside targets are set at 1.1670, 1.1715, and the critical 1.1730 level. A weekly close above 1.1747–1.1775 indicates a potential movement toward the 1.1917–1.2019 area. A sustained break under 1.1537 triggers downside invalidation, while deeper deterioration below 1.1497 opens the path to 1.1394 and the 1.1228–1.1254 band.