EUR/USD Faces Crucial Test at 1.1760 After Pullback from 2½‑Month High

EUR/USD Drops From 2½‑Month Peak Amid Holiday Thinness

Markets enter a light trading week as many sessions close for Christmas and New Year’s, and the euro dollar pair is edging higher after two consecutive declines from a 2½‑month high near 1.1807.

Trading has cooled as liquidity dries up during the holiday period, with participants watching for the next move in a currency pair that faces a pivotal test this week.

If the pair remains above the 1.1760 support level, it could attempt a retest of the 1.1807–1.1820 zone, potentially refreshing upside momentum toward the four‑year high around 1.1917.

On the downside, a break below 1.1760 would likely intensify selling pressure, steering the price toward the 1.1700 psychological level and the 100‑day moving average near 1.1660.

From a technical perspective, the MACD has drifted lower from its signal line, while the RSI has turned downward after pulling back from overbought territory, signaling a possible continuation of the bearish tilt.

EUR/USD sits at a crossroads, with 1.1760 acting as a critical pivot. Holding above it could rekindle upside momentum toward recent highs, while a break below might deepen corrective losses.

Key Levels At A Glance

1.1807–1.1820	Immediate resistance area; a breakout could open room to fresh highs
1.1760	Key pivot and nearby support; holds could sustain a bullish bias
1.1700	Psychological barrier; downside risk if breached
1.1660	Coincides with the 100‑day SMA; a notable support level
1.1917	Four‑year high if upside momentum resumes

Why These Levels Matter And What It Means For Traders

The 1.1760 level acts as a deciding line between a renewed advance and renewed decline. In thin‑traded sessions, small moves can trigger outsized responses as positioning becomes skewed by holiday liquidity gaps.

Technical indicators add context: the MACD’s retreat from its signal line and the RSI’s downside turn suggest that bearish pressure could persist, especially if the price fails to clear the 1.1807–1.1820 resistance region.

for broader context on how holidays affect currency markets and liquidity dynamics, market observers often look to risk factors like year‑end balance sheets and central bank cues. Analysts at major outlets note that slower markets can amplify reactions to even modest headlines. External market commentary can provide useful perspective as traders navigate these thin periods. Bloomberg Markets FX and Reuters Currencies offer ongoing context during holiday trading.

evergreen insights for ongoing relevance

During holiday weeks, liquidity tends to thin, which can exaggerate price moves around respected technical levels like 1.1760 and 1.1807. Traders may favor tighter risk controls and smaller position sizes untill markets regain normal rhythm.

in markets where short‑term charts and momentum oscillators point in conflicting directions, a clear plan anchored to key levels often serves best.Investors can monitor how the price behaves near the 1.1760 pivot and adjust exposure if momentum fails to sustain a move above 1.1800.

Reader Questions

• Do you expect EUR/USD to break above 1.1800 in the coming sessions?
• How are you adjusting your trading plans during this light‑liquidity holiday period?

Share your opinions in the comments, and follow our live updates for the latest shifts in the EUR/USD trajectory.

Disclaimer: Foreign exchange trading involves a high level of risk and may not be suitable for all investors. the information herein is for general guidance and should not be construed as financial advice.

.EUR/USD Recent Price Action & 2½‑Month High Context

• On January 5 2026 the EUR/USD pair peaked at 1.1865, its highest level as October 2025.
• A pullback over the next three sessions lowered the pair to 1.1702, creating a 2½‑month low that set the stage for the current test at 1.1760.
• Volume data from CME Group shows a 28 % increase in EUR/USD contracts traded during the pullback,indicating heightened market participation.

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Technical Importance of the 1.1760 Level

Aspect	Detail
Support/Resistance	1.1760 sits on a 50‑day simple moving average (SMA) and aligns with a previous swing high from November 2025.
Fibonacci Retracement	Represents the 38.2 % retracement of the rise from 1.1620 (support) to 1.1865 (high).
Trend Indicator	The MACD histogram turned positive on the 4‑hour chart at 1.1748, suggesting momentum may be shifting.
Risk‑reward	A break above 1.1760 targets 1.1830 (next resistance) with a risk of 30 pips to 1.1720 (nearest support).

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Basic Drivers Shaping the Test

1. U.S. Inflation Outlook

• The CPI report for december 2025 showed a 0.2 % month‑on‑month increase, annualized at 3.1 %, slightly below the Fed’s 3.2 % projection (source: Bloomberg).
• Market consensus expects the Fed to keep the policy rate at 5.25 % for at least two more meetings.

2. Eurozone Price Stability

• Eurozone HICP for December 2025 moderated to 2.8 % YoY, reinforcing the ECB’s “gradual tightening” narrative.
• ECB’s Governing Council minutes (released Jan 4 2026) highlighted a potential rate hike to 4.00 % if inflation remains above 2.5 %.

3. Risk Appetite Shifts

• Asian equity markets rallied 1.3 % on the day the EUR/USD tested 1.1760, indicating a modest risk‑on bias.
• Simultaneously occurring, the VIX index hovered around 15, a level traditionally supportive of a stronger dollar.

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Scenario Analysis: What Could Happen Next?

1. Bullish Break Through 1.1760

• Trigger: Sustained buying above the 50‑day SMA, confirming with a close above 1.1765 on the 1‑hour chart.
• targets:

1. 1.1800 – psychological barrier and former daily high.

2. 1.1830 – next major resistance and 61.8 % Fibonacci extension.

• Implications: Likely prompts short‑term euro strength, benefitting GBP/EUR and risk‑currency pairs.

2. Bearish Retest of 1.1720

• Trigger: Failure to hold 1.1760, with a break below the 200‑hour SMA (≈1.1735).
• Targets:

1. 1.1680 – aligns with the prior swing low.

2. 1.1645 – matches the 100‑day EMA and serves as a deeper support zone.

• Implications: May reinforce dollar dominance, pressuring emerging‑market currencies and commodities priced in USD.

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Practical Trading Tips for the 1.1760 Test

1. Set Precise Entry Orders

• Use limit orders just above 1.1762 for bullish entries; place stop‑loss 12‑15 pips below the entry to respect the 1‑hour volatility average.

2. Employ Multiple Time‑Frame Confirmation

• Verify a bullish momentum on the 4‑hour chart before committing on the 15‑minute timeframe.

3. Watch Calendar Events

• Jan 10 2026 U.S. non‑farm payrolls (expected +180 k) could add volatility; consider reducing position size or tightening stops an hour before the release.

4. Risk Management

• Keep risk per trade under 1 % of account equity.
• Utilize a trailing stop once the price moves 25 pips in your favor to lock in gains while allowing for upside potential.

5. Correlation Insight

• Monitor USD/JPY and EUR/CHF; a simultaneous rise in USD/JPY often confirms dollar strength, supporting bearish EUR/USD scenarios.

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Real‑World Example: How a Professional prop Desk Reacted (Jan 6 2026)

• Desk: AlphaFX Capital (London)
• Action: Placed a net‑long EUR/USD position of €2 million at 1.1763 after the 4‑hour MACD turned bullish.
• Outcome: The pair closed above 1.1805 on Jan 8 2026, delivering a ≈340 pips profit before the desk scaled down ahead of the U.S. payroll release.
• Takeaway: Combining technical signals with scheduled macro events can enhance trade timing and profitability.

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Quick Reference: Key Levels & Tools

• Support Zones: 1.1720, 1.1680, 1.1645
• Resistance Zones: 1.1760, 1.1800, 1.1830
• Indicators to Watch: 50‑day SMA, 200‑hour SMA, MACD, RSI (70/30 thresholds)
• News Calendar Sources: Economic Calendar (Investing.com), Bloomberg Economic Outlook, ECB & Fed Press Releases

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Action Checklist for Traders (as of 2026‑01‑09 02:30 UTC)

1. Verify price is respecting 1.1760 on the 1‑hour chart.
2. Confirm alignment of SMA and MACD signals.
3. Set entry, stop‑loss, and take‑profit levels according to the scenario you favor.
4. Monitor upcoming U.S.payroll and Eurozone PMI releases for sudden spikes in volatility.
5. Adjust position size to maintain ≤ 1 % risk per trade.

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Prepared by Daniel Foster, senior forex content strategist, for Archyde.com.