EUR/USD Exchange Rate Outlook: Consolidation Near 1.1800 as Fed Policy Concerns Weigh on Dollar

EUR to USD maintains bullish structure around 1.1755 as markets enter the European session on Friday. The pair continues to find support above the 100-day exponential moving average, signaling sustained upside momentum despite consolidation patterns. Resistance emerges at the 1.1820 level, while initial support sits at 1.1655.

Base Case: Policy Divergence Favors the Euro

The European Central Bank’s December meeting reinforced a patient stance on rate cuts, with policymaker commentary suggesting limited urgency for additional easing in the near term. ECB President Christine Lagarde underscored the institution’s commitment to a data-dependent framework, deliberately avoiding forward guidance on future policy paths. This measured approach has provided a subtle tailwind for the Euro, as markets recalibrate expectations for the rate cycle.

Across the Atlantic, incoming US leadership has signaled a preference for accommodative monetary policy. Reports that President Donald Trump plans to nominate a dovish Federal Reserve successor when Jerome Powell’s term concludes in May have reignited concerns about central bank autonomy. Trump’s public comments endorsing lower rates and reduced policy friction have sparked debate among investors regarding the Fed’s future independence and credibility—a dynamic that continues to weigh on the US Dollar’s valuation.

Technical Perspective: Range-Bound but Resilient

The EUR to USD daily chart illustrates a pair trading with conviction above its 100-day EMA, currently at 1.1635. The Relative Strength Index stands at 59.8, reflecting building momentum without entering overbought territory. Price remains anchored above the Bollinger Band midpoint near 1.1738, though the narrowing band width suggests consolidation after the recent recovery phase.

The topside target to monitor remains 1.1820, representing the upper Bollinger Band. A decisive daily close above this level could trigger an extension of the uptrend. Conversely, a pullback beneath the middle band would introduce downside risk toward the lower band near 1.1655. The technical setup favors dip-buying strategies until volatility expands or structural support breaks.

What’s Next for EUR/USD Traders?

The interplay between ECB hawkishness and Fed dovishness will likely remain the primary driver for the EUR to USD pair in the coming weeks. Watch for any policy commentary that could alter rate expectations, particularly around the Fed’s next decision. For technical traders, price action around 1.1820 and 1.1655 will define near-term directional bias.