FX.co ★ amiron56 | EUR/USD

As of January 4, 2026, the EUR/USD currency pair is navigating a complex transition phase with a market price of 1.1719. After concluding 2025 with a robust annual gain of more than 13%, the pair is currently testing the sustainability of its multi-year uptrend. The market is caught between a Federal Reserve that has become increasingly dovish and a European Central Bank that remains cautious amidst uneven economic growth. This analysis integrates the most recent macroeconomic shifts with a technical framework designed for the first quarter of 2026. Fundamental macro landscape The global economic narrative for 2026 is defined by a shift in central bank priorities. The Federal Reserve enters the year with its funds rate at 3.50%–3.75% after a late-2025 easing cycle. While the Fed signaling a potential pause in January, the structural pressure on the U.S. Dollar remains due to a cooling labor market, with college-educated unemployment rising and NFP trends showing signs of entrenchment. Market participants are currently pricing in two additional cuts for 2026, though the exact timing is a subject of intense debate among Fed governors. Within the European landscape, the European Central Bank continues to uphold a tighter policy framework. By holding the primary refinancing rate at 2.15%, the ECB is signaling a commitment to price stability. Recent figures from December point to an accelerated downturn in Eurozone manufacturing, with the PMI dropping to 48.8, while inflation in the services sector persists at 2.2%. This creates a looming threat of stagflation, which hinders the ECB from mirroring the more accommodative path taken by the Federal Reserve. The present exchange rate of 1.1719 captures this ongoing conflict: a fundamentally soft Dollar clashing with a vulnerable Eurozone economy. Upcoming economic events Traders must account for several high-impact catalysts scheduled for the coming weeks that will likely define the Q1 trend: U.S. Nonfarm Payrolls (NFP): Set for release this week, this is the primary market mover. Any figure below 100,000 will confirm the "labor market tilt" and likely spark a rally toward 1.1850. Eurozone Flash CPI: Mid-January inflation data will be critical. If core inflation drops below 2%, the ECBs "hold" narrative may crumble, leading to Euro weakness. U.S. Manufacturing PMI: Following a preliminary reading of 51.8, the final print will confirm if the U.S. continues to diverge positively from Europe’s industrial contraction. FOMC Meeting (January 27-28): While a rate cut is unlikely this month, the guidance regarding the neutral rate and the transition to a new Fed Chair in May will be paramount. Technical resistance and support The price action at 1.1719 suggests the pair is currently testing the lower boundary of a multi-month consolidation range. Resistance Levels: Immediate Resistance: 1.1764. This level acted as a firm pivot point during the holiday session and must be reclaimed for bulls to regain control. Major Resistance: 1.1830. This is the ceiling of the 2025 rally. A break above this targets the 1.2000 psychological milestone. Support Levels: Immediate Support: 1.1700. This is a critical technical and psychological floor. A daily close below this level would signal a trend-line breach. Major Support: 1.1635. This area aligns with structural support from late 2025 and serves as a primary defensive zone for long-term buyers. Deep Support: 1.1485. This level hosts the 200-day Simple Moving Average and marks the boundary of the bull market. Fibonacci tuning for entry and exit To identify high-probability zones, we apply Fibonacci retracement from the 2025 trough of 1.0400 to the peak of 1.1840. Entry Zone (Buy): The 23.6% retracement level is situated near 1.1500. For traders looking for a safer entry into the broader uptrend, a deep correction to this zone offers the best risk-to-reward ratio. Current Retracement: The market is currently oscillating near the 1.1700 handle, which represents a minor 14.6% retracement. If the price fails to hold 1.1700, the next Fibonacci target is the 1.1500–1.1510 corridor. Exit Zone (Take Profit): For current long positions initiated near 1.1719, the first objective is 1.1830. A secondary extension target, calculated at the -27% level, sits at 1.1960. Moving average and MACD strategy The current technical setup favors a cautious approach as momentum indicators signal a loss of upward velocity. Moving Average Strategy: The 50-day Simple Moving Average is trending near 1.1710, almost identical to the current market price. This makes the 1.1710–1.1719 area a "decision zone." If the price spends consecutive days below the 50-day SMA, the short-term bias shifts to bearish. However, as long as the 50-day SMA remains above the 200-day SMA (1.1485), the "Golden Cross" remains active, supporting a long-term bullish outlook. MACD Indicator Tuning: The MACD on the daily timeframe is showing a clear bearish crossover. The signal line is currently descending toward the zero line, while the histogram is printing negative bars. This divergence between the price (which is near highs) and the MACD (which is falling) suggests a "bull trap." Traders should wait for the MACD histogram to return to the positive side before committing to aggressive long positions. Integrated trading execution Given the current market price of 1.1719 and the proximity to the 50-day SMA, a "Defensive Bullish" strategy is recommended. Trade Execution: Avoid entering at the exact current price. Instead, wait for a confirmed "stop-run" below 1.1700. If the price dips to 1.1680 and quickly recovers back above 1.1700, this "fake-out" provides a high-conviction long entry. Target: The primary target for this move is 1.1830. If U.S. NFP data misses expectations, this target can be extended to 1.1915. Stop-Loss: Place a stop-loss at 1.1620. This protects the trade against a full breakdown of the 50-day SMA and the recent structural lows. EUR/USD is at a pivotal crossroads. While the fundamental tailwind of a dovish Fed persists, the technical divergence in the MACD and the contraction in Eurozone manufacturing suggest that a period of cooling is necessary. Success in January 2026 will depend on patience and waiting for the 1.1700 support to be thoroughly tested before targeting the next leg toward 1.2000.