Euro to Dollar Forecast: EUR/USD Holds Near 1.1680 as ECB Rate Outlook and US Jobs Data Limit Volatility

Toward the end of the year, key macroeconomic indicators showed signs of stabilization. Retail sales in December rose by 0.2% month-on-month, beating analysts’ expectations of 0.1%, while annual growth accelerated to 2.3% from 1.6%, supported by revisions to previous data. At the same time, German industrial production was revised from 2.0% to 0.8% against preliminary estimates of –0.6%, amid a sharp increase in new orders from 1.6% to 5.6%. On the downside, German exports fell from 0.3% to –2.5%, while imports increased from –1.5% to 0.8% versus expectations of 0.2%, leading to a contraction in the trade surplus from €17.2 billion to €13.3 billion.

Overall, the eurozone economy is recovering moderately amid inflation close to the European Central Bank’s (ECB) target. Under these conditions, most investors expect policymakers to keep the key interest rate unchanged at 2.15% throughout the year. Improvements in the labor market are also supporting the economy: EU unemployment declined from 6.4% to 6.3% in November, confirming a gradual recovery in domestic demand, rising consumer confidence, and laying the groundwork for medium-term support of the single currency.

Meanwhile, according to a Financial Times survey of 70 leading European economists, 26.0% of respondents named former Bank of Spain Governor Pablo Hernández de Cos as the most likely next ECB president, although Dutch central bank chief Klaas Knot remains among the frontrunners. The results point to a potential contest between candidates with more “hawkish” and more “dovish” policy stances, which could directly influence the future interest-rate path and inflation assessment in the region. The ECB presidency will become vacant in November 2027, and several candidates are already positioning themselves, including Bundesbank President Joachim Nagel and ECB Executive Board member Isabel Schnabel.

On the other hand, U.S. dollar dynamics remain a key driver of EUR/USD in the short term. Today, the USDX is trading near 98.7 points, showing a local uptick after the release of labor market data. In December, the U.S. economy added 50.0 thousand nonfarm payrolls, below forecasts of 66.0 thousand and the revised November figure of 56.0 thousand. Private-sector job gains totaled 37.0 thousand, also below expectations. At the same time, average hourly earnings accelerated from 3.6% to 3.8% year-on-year and from 0.1% to 0.3% month-on-month, pointing to persistent inflationary pressure.

In parallel, the unemployment rate fell from 4.6% to 4.4%, strengthening confidence in the resilience of the U.S. labor market and virtually eliminating the likelihood of another near-term rate cut by the Federal Reserve. According to the CME FedWatch Tool, the probability of the policy rate being held in the 3.50–3.75% range stands at 95.0%, limiting downside potential for the dollar and keeping EUR/USD range-bound. A breakout below the key support zone at 1.1600–1.1620 or above the resistance area at 1.1670–1.1700 will determine the pair’s medium-term direction.

Support and Resistance Levels

On the daily chart, the instrument remains in correction, approaching the support line of the ascending channel at 1.2000–1.1530.

Technical indicators have turned and are maintaining a renewed sell signal, which has strengthened amid the local pullback. The fast EMAs on the Alligator indicator are positioned below the signal line and continue to widen their range, while the AO histogram is forming corrective bars, moving deeper into the sell zone.

Support levels: 1.1560, 1.1400.

Resistance levels: 1.1710, 1.1920.

Trading Scenarios and EUR/USD Forecast

Short positions can be considered after a confirmed break below 1.1560, with a target at 1.1400 and a stop-loss at 1.1650. Time horizon: 7 days or longer.

Long positions can be considered after a confirmed break above 1.1710, with a target at 1.1920 and a stop-loss at 1.1640.