EUR/USD Exchange Rate Analysis: Recovery Intact as Buyers Hold Key Technical Level Above 1.1750

EUR/USD Consolidates Above Critical Support as Dollar Weakness Persists

The EUR/USD currency pair stabilized around 1.1755 during Friday’s European morning trade, maintaining its bullish momentum within a well-defined technical framework. This recovery reflects a combination of factors: the European Central Bank’s dovish shift in policy messaging and mounting concerns about potential political pressure on the Federal Reserve, both of which have weakened the dollar’s appeal relative to the euro.

Central Bank Divergence Fuels the EUR Recovery

At its December policy meeting, the ECB signaled a measured approach to future rate decisions, with Christine Lagarde reinforcing a “meeting-by-meeting” assessment framework that avoids forward guidance commitments. This cautious stance, coupled with market speculation that rates may hold steady through 2026, has bolstered confidence in the euro. Meanwhile, on the dollar’s side, investor sentiment has shifted as speculation mounts regarding a dovish successor to Federal Reserve Chair Jerome Powell. Reports suggest the incoming administration favors keeping interest rates accommodative, raising governance concerns and creating headwinds for USD strength.

Technical Picture Supports Further EUR Upside

From a technical standpoint, the EUR/USD pair is trading comfortably above its 100-day exponential moving average (EMA), which currently sits at 1.1635. This positioning preserves the medium-term uptrend. The Relative Strength Index (RSI) has climbed to 59.8, reflecting strengthening momentum while remaining safely below overbought territory. The price action has also remained above the Bollinger middle band at 1.1738, though the bands are tightening—a signal suggesting volatility may be consolidating before the next directional move.

Key Levels Define the Road Ahead

Resistance materializes at 1.1820, where the upper Bollinger band intersects. A decisive close above this level could accelerate gains and signal renewed buying conviction. On the downside, support emerges at 1.1655 near the lower Bollinger band. Should eur to usd retreat through the middle band, this level becomes the next defensive zone. For traders, the current structure suggests that dips represent buying opportunities, particularly as long as the 100-day EMA holds as dynamic support.