EUR/USD flipped to positive territory on the daily chart Wednesday, finding solid support at 1.1720 during the European morning session. Heading into the US open, the pair is trading just above 1.1750. The US Dollar’s recovery attempt has lost momentum, though the upcoming release of US Jobless Claims could inject some volatility into an otherwise lethargic year-end trading session.
Broader Context: A Stellar Year for the Euro From a wider perspective, the shared currency is on track to secure a 14% annual appreciation. This rally has been primarily driven by the monetary policy divergence between the European Central Bank (ECB) and the Federal Reserve. Additionally, the Greenback has been weighed down heavily by a softening US economy and uncertainty surrounding President Donald Trump’s erratic trade policies.
Daily Digest: Fed Minutes Highlight Internal Split The Euro faced selling pressure on Tuesday after the FOMC minutes cast doubt on the timing of the next interest rate cut. Despite this brief boost, the US Dollar is set to close its worst yearly performance in eight years. The Dollar Index (DXY) has depreciated nearly 10% over the last 12 months.
Key takeaways from the December 9-10 Fed meeting minutes include:
- High Dissent: The 25 basis point rate cut was approved by a 9-3 vote, marking the highest number of dissenters in six years.
- Policy Challenge: The divergence reflects the difficulty of supporting a deteriorating labor market without fueling already strong inflationary pressures.
- Future Path: Most members view further cuts as appropriate only if inflation declines as projected. The committee signaled potentially just one rate cut in 2026 and another in 2027.
Economic Calendar: Jobless Claims Investor attention now turns to the weekly US Initial Jobless Claims report. Expectations are for first-time applications to rise to 220K for the week of December 26, up from 214K the previous week. However, liquidity is expected to remain thin as Japanese markets are closed for the week and most global markets prepare for New Year festivities on Thursday.
Technical Outlook (Note: The text provided mentions a technical header but cuts off. Based on the context, the section would likely introduce the resistance analysis). EUR/USD is likely to find resistance at the reverse trendline.
EUR/USD is staging a modest recovery at the time of writing, though the technical landscape remains predominantly bearish. The 4-hour Relative Strength Index (RSI) has rebounded from near-oversold conditions but continues to trade below the neutral 50 threshold. Similarly, the Moving Average Convergence Divergence (MACD) indicates that while bearish momentum is easing, the indicator remains firmly in negative territory.
Upside Scenarios (Resistance) The immediate obstacle for any bullish reversal is the reverse trendline, currently located near 1.1770. A decisive break above this level would open the door for a move toward the 1.1805 area (highs from December 16 and 24), followed by the September 23-24 peaks around 1.1820.
Downside Scenarios (Support) Conversely, should sellers regain control, the pair is expected to find initial support at 1.1700 (lows from December 17 and 19). If this level fails to hold, the focus shifts to 1.1680 (aligned with the Dec 4 high and Dec 11 low), with further downside risk exposing the 1.1615