The EUR/USD exchange rate has halted its seven-day decline, trading around 1.1676 with a 0.36% rise, as the US Dollar faces sell-offs. This pressure comes after the US Department of Justice issued subpoenas against Federal Reserve Chair Jerome Powell, related to a renovation project.
Concerns over Federal Reserve independence are affecting the US Dollar’s strength, leading to shifts in other major currencies. Technical indicators show EUR/USD stabilising but lacking strong upward momentum, notable at the 1.1700 psychological level.
Breaking Above Key Levels
Breaking above 1.1700 could strengthen the currency pair towards the 1.1730 mark and potentially reach 1.1800. However, failing to hold above the 1.1650 level may bring attention back to the 1.1600 and 1.1550 supports.
Momentum indicators reinforce the currency pair’s uncertain direction. The Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) suggest limited directional momentum, with RSI hovering near 47.
The Euro is the official currency for 20 European Union countries, forming the Eurozone. It accounts for 31% of all forex transactions, trailing the US Dollar, with the EUR/USD pair being the most traded currency pair globally. The European Central Bank governs monetary policy in the region.
We are seeing the EUR/USD show early signs of stabilization, but bearish momentum has not fully disappeared. This reminds us of the events in 2025 when the pair snapped a seven-day losing streak after political pressure on the Federal Reserve weakened the dollar. That episode showed how quickly sentiment can shift based on non-economic news.
As of today, January 12, 2026, the market drivers are less about political shocks and more about fundamental economic data. Recent figures show Eurozone inflation holding at a stubborn 2.8%, while the latest US CPI data came in at 3.1%, keeping the pressure on central banks. This slight difference is fueling debate over which bank, the ECB or the Fed, will be forced to cut interest rates first this year.
Key Technical Levels
The key technical levels from last year, like the 1.1700 resistance, are currently out of reach as the pair is trading in a much lower range. We are now watching the 1.0950 level as a significant cap on any recovery attempts, with strong support located near 1.0780. The fading momentum we see on indicators like the MACD suggests the market is waiting for a new catalyst before making a decisive move.
For traders looking at the coming weeks, this environment of uncertainty and defined ranges makes options strategies attractive. Selling out-of-the-money puts and calls through an iron condor could be a way to profit if the pair remains stuck between its current support and resistance levels. This strategy benefits from sideways movement and the passage of time.
Conversely, the memory of 2025’s sudden volatility spike serves as a warning. Traders who anticipate a breakout from the current tight range, perhaps following the upcoming ECB meeting, could look at buying straddles. This would allow for a profit from a significant price swing in either direction, without having to predict the specific outcome of policy decisions.
We have also seen a notable shift in market positioning according to the latest CFTC report. Net-long positions on the Euro have decreased by nearly 15,000 contracts over the past month, the largest drop since the third quarter of 2025. This indicates that large speculators are reducing their bullish bets, adding another layer of caution for any immediate upside.
