Insights 
VT 
Key Points
- EURUSD traded just above $1.17, near its strongest level since late September.
- The ECB lifted its 2025 growth forecast to 1.4% from 1.2%, while inflation stays near 2%.
The euro traded just above $1.17 during a holiday-shortened week, holding close to its strongest level since late September. Price action remained steady rather than aggressive, reflecting reduced liquidity but firm underlying support.
The move continues to reflect a widening divergence between the European Central Bank and the US Federal Reserve, with policy expectations leaning in favour of the single currency.
EURUSD last traded around 1.1732, up 0.22% on the session. Buyers continued to defend pullbacks, keeping the pair above the 30-day moving average and within a well-defined consolidation range.
ECB Signals Stability as Growth Outlook Improves
Last week, the European Central Bank left interest rates unchanged for a fourth consecutive meeting.
Policymakers signalled that rates are likely to remain at current levels for some time, pointing to resilience in the eurozone economy.
Officials also noted that the region has handled US tariffs better than initially expected.
Recent data releases have surprised to the upside, prompting the ECB to upgrade its growth outlook again after a similar revision in September.
The central bank now forecasts eurozone growth at 1.4% in 2025, up from a previous estimate of 1.2%.
Headline inflation is projected to hover around the 2% target through 2028, reinforcing the case for a prolonged pause rather than near-term easing.
This steady outlook continues to underpin the euro, especially against currencies where rate cuts appear closer.
Fed Rate Cut Expectations Weigh on the Dollar
Across the Atlantic, softer-than-expected US inflation data have shifted market expectations. Traders increasingly price in Federal Reserve rate cuts starting next year, reducing yield support for the dollar.
This shift has narrowed rate differentials in favour of the euro, even without any fresh tightening signals from the ECB.
The dollar’s inability to regain momentum has allowed EURUSD to remain elevated, despite the absence of strong euro-specific catalysts during the week.
Technical Analysis
EUR/USD is currently trading at 1.17321, up 0.22% on the session, but price action shows signs of hesitation near the recent resistance zone around 1.1733–1.1750.
This level has been tested several times since August, but buyers have yet to produce a decisive breakout.
The Moving Averages (MA 5, 10, 30) remain in a bullish alignment, suggesting that short-term sentiment still favours the upside.
However, the price is consolidating just below the previous peak at 1.19181, indicating a potential double-top risk if buyers fail to clear resistance.
The MACD histogram is in mild positive territory but flattening, and the signal line convergence points to waning momentum. A pullback toward the 1.1650–1.1600 area could occur if bullish follow-through falters.
Cautious Outlook as Markets Await Fresh Catalysts
EURUSD may continue to trade sideways near current levels as liquidity returns and markets reassess Fed timing expectations.
As long as the pair holds above 1.1600, downside pressure may stay limited. A sustained break above 1.1800 would require firmer evidence of US rate cuts, while a dip below support would likely need a shift in ECB tone or stronger US inflation data.
