EUR/USD Outlook: Bullish Bias Into Year-End

EUR/USD opened the week with gains of over 0.4%, signalling renewed bullish momentum for the euro as 2025 comes to a close. The move is largely driven by central bank dynamics that continue to weigh on the U.S. dollar.

Central Bank Snapshot

The ECB ended the year by keeping rates at 2.00% and signalling a neutral stance that may extend into 2026. Markets largely expect no change at the February meeting, reinforcing policy stability in the euro area.

In contrast, the Federal Reserve closed 2025 with a rate cut to 3.75% and remains divided on its next steps. Market probabilities show uncertainty for early 2026, keeping pressure on the dollar.

Dollar Weakness in Focus

The DXY index continues to trend lower and is approaching the 98 level, pointing to short-term structural weakness in the U.S. dollar.

Bottom Line

As long as Fed uncertainty persists and the ECB maintains stable policy, the euro remains relatively attractive. This environment supports continued buying interest in EUR/USD over the near term.

EUR/USD Technical Outlook

EUR/USD remains locked in a broad consolidation. Since mid-June, price has traded within a wide range, with resistance near 1.1820 and support around 1.1510. Recent gains have pushed the pair back toward the top of this range, close to yearly highs. If buying pressure holds, a breakout is possible and could signal a stronger bullish phase. Failure to clear the highs, however, may lead to short-term pullbacks.

Momentum Indicators

RSI is holding above the 50 level, confirming bullish momentum, but it is nearing the overbought zone around 70, which raises the risk of a temporary correction. MACD remains flat around the zero line, highlighting indecision and leaving room for short-term corrective moves.

Key Levels to Watch

• 1.1820: Major resistance and range high. A clear break above would strengthen the bullish outlook.

• 1.1687: Near-term barrier that may limit pullbacks.

• 1.1614: Key support near the 50-period moving average. A move below could revive b

  earish pressure and keep price range-bound.

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