EUR/USD Hovers Near 1.19 as Year‑End US Data and Fed Outlook Set the Stage for a Breakout

Breaking: Markets Brace for Key U.S. Data as Year-End Liquidity Thins

Markets are holding in a narrow range as the year closes, with liquidity thinning ahead of a slate of U.S. data releases. The upcoming reports could steer the course of markets into December’s end and early january.

A softer growth picture could weigh on the U.S. dollar, even if inflation remains elevated, as weaker output would raise expectations for next year’s policy path.

For now,the prevailing view is that policy rates will stay unchanged at the January Federal Reserve meeting.

Fed Policy outlook for Next Year

The central bank finished the year cautious, as the labor market showed signs of cooling. The Fed’s dual mandate – price stability and employment – helps explain why the easing cycle continues even with inflation running above the target.

Recent inflation readings offered some relief, with annual inflation around 2.7 percent.

As the new year begins, traders will focus on the labor market, inflation, and growth measures.If these indicators remain weak, more rate cuts than currently priced in by markets could come into play.

Speculation about leadership changes at the Fed persists. A new chair is anticipated next year, with Kevin Hassett widely viewed as the likely successor, a shift that could align policy with broader governance preferences.

GDP and PCE Still to come Before the Holidays

To close the macro calendar, markets await GDP data and the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures price index (PCE).

Forecasts point to quarter-on-quarter GDP growth staying above 3 percent,a positive outcome if realized. A stronger print would buoy risk sentiment, while a softer read could weigh on rates and the dollar.

GDP data are slated for release in the coming session, with the Bureau of Economic Analysis providing the official figures. For a broader view, readers can consult the BEA website.

EUR/USD Technical Outlook

The decisive level for the EURUSD pair remains the December high near 1.1800. A data-driven round of weaker dollar readings could break this barrier, opening a path toward 1.19 in the early weeks of the new year.

The uptrend line continues to cap declines, with near-term support around 1.17, last tested toward the end of the prior week.

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Key Factor	Current View
Upcoming data	GDP, PCE, inflation indicators
Fed stance	Likely unchanged at January meeting
EUR/USD level	Near 1.18; potential move toward 1.19
Risk factors	Weak growth, inflation surprises, policy shifts

Disclaimer: Market analysis is intended for informational purposes and does not constitute investment advice.

What data will you be watching most as the year ends? Do you expect the Fed to cut rates next year? Share your thoughts in the comments below.

(psychological 1.19 + 25‑pip buffer, also 38.2 % Fib extension)

EUR/USD Near 1.19 – What Year‑End US Data and the Fed Outlook Mean for a Potential Breakout

Market Snapshot: EUR/USD Hovering at 1.19

• Current price: 1.1887 (as of 12:30 GMT, 23 dec 2025)
• 24‑hour range: 1.1854 - 1.1912,tight consolidation around the 1.19 mark
• Volume: Slightly above average, indicating increasing trader interest ahead of the holiday‑season data releases

Key US Economic Releases Shaping the Pair

Indicator	Latest Result (Nov 2025)	Market Expectation	Impact on EUR/USD
CPI (YoY)	3.1 %	3.2 %	Slightly lower inflation pressure supports a softer dollar
PCE Price Index (QoQ)	0.3 %	0.3 %	aligns with Fed’s “soft landing” narrative
Non‑Farm Payrolls	+210 k	+215 k	Slightly weaker job growth nudges expectations of a rate pause
Unemployment Rate	3.8 %	3.7 %	Higher unemployment reinforces dovish tone
Retail Sales YoY	4.6 %	4.8 %	Cooler consumer spending may temper dollar strength
Consumer Confidence index	102.4	104.0	Below‑trend confidence adds to the dollar’s downside bias

Why it matters: The modest divergence between headline CPI and core measures suggests that the Fed may adopt a “wait‑and‑see” approach through year‑end,reducing immediate upward pressure on the USD and allowing the euro to test higher levels.

Federal reserve Outlook – Rate Policy and Balance‑Sheet Considerations

1. Policy Rate: The Fed funds target remains at 5.25 %-5.50 % after the June 2025 decision to hold rates steady.
2. projected Path: The December “Projection Summary” (released 12 Dec) shows a 60 % probability of a 25‑basis‑point cut in march 2026.
3. Balance‑Sheet Normalisation: QE tapering concluded in Q3 2025; the Fed is now gradually reducing its holdings of Treasury securities, which historically supports a modest dollar rally but is offset by the softer inflation data.
4. Forward Guidance: Chair Powell emphasized “data‑dependence” and “flexible policy” – a phrase that market participants are interpreting as a green light for potential easing if the economy slows further.

Bottom line for EUR/USD: A delayed cut or an unchanged policy rate through December keeps the dollar vulnerable to a technical breakout to the upside (EUR strength) if the pair clears the 1.1925 resistance.

european Data & ECB Stance – Counterbalance to US Drivers

• Eurozone HICP (YoY, Oct 2025): 2.7 %, down from 3.0 % in july 2025.
• ECB Rate: 4.00 % (unchanged since July 2025) – the ECB signaled willingness to hold rates for longer to ensure inflation stays near its 2 % target.
• PMI composite (Nov 2025): 49.8 (just below the 50 growth threshold) – indicates marginal contraction, but the market expects stabilization.
• German Industrial production: +0.4 % QoQ, the strongest quarterly gain as 2023, adding a modest euro‑supporting catalyst.

Implication: The ECB’s disciplined stance, paired with cooling inflation, creates a backdrop where the euro can benefit from any perceived dollar weakness without risking a rapid depreciation.

Technical Framework – Support, Resistance & Breakout Scenarios

1. Key Price Levels

• Immediate support: 1.1850 (recent low, also 61.8 % fibonacci retracement of the Sep‑2025 rally)
• Primary resistance: 1.1925 (psychological 1.19 + 25‑pip buffer, also 38.2 % Fib extension)
• Breakout target: 1.2000 (round‑number barrier, aligns with the 100‑day moving average)

2. Chart Patterns

• Ascending triangle: flat top at 1.1925, rising lower trendline from 1.1760 to 1.1850 – a classic bullish continuation pattern.
• Moving‑average crossover: 20‑day EMA (1.1868) is above the 50‑day EMA (1.1835), signaling short‑term bullish momentum.

3. Momentum Indicators

Indicator	Value	Interpretation
RSI (14)	54	Neutral; no overbought pressure yet
MACD Histogram	+0.0012	Positive momentum building
Stochastic (Fast %K/%D)	62/58	Approaching overbought territory, watch for a possible pull‑back at 1.1925

4.Scenario outlook

Scenario	Trigger	Expected Move
Bullish breakout	Close above 1.1925 on increased volume	EUR/USD → 1.2000‑1.2075 within 2‑4 weeks
Failed breakout	Re‑test of 1.1925 with bearish candlesticks	EUR/USD → 1.1810‑1.1750 (down to support)
Sideways range	Consolidation between 1.1850‑1.1925	Limited intraday opportunities; focus on swing‑trade entries at support/resistance pivots

Actionable trading Strategies

1. Breakout Entry (Long)

• Entry price: 1.1930 (20‑pip buffer above resistance)
• Stop‑loss: 1.1895 (just below the ascending‑triangle top)
• Take‑profit tiers: 1.2000 (first target) and 1.2075 (second target)

2. Pull‑Back Trade (Short)

• Entry price: 1.1865 (mid‑point of the support zone)
• Stop‑loss: 1.1895 (above recent swing high)
• Take‑profit: 1.1810 (near the 61.8 % Fibonacci level)

3. Range‑Bound Scalping

• Timeframe: 15‑minute chart
• Entry: Buy on bullish engulfing at 1.1880‑1.1890, sell at 1.1910‑1.1920
• Risk: Tight stops (5‑10 pips) and target 8‑12 pips per trade

Benefits of Monitoring EUR/USD Near Year‑End

• Liquidity premium: Year‑end sees heightened cross‑currency flows, offering tighter spreads and lower execution costs.
• Macro‑driven volatility: US data releases and Fed commentary inject predictable price swings, ideal for short‑term traders.
• Portfolio diversification: The euro provides a natural hedge against a weakening dollar, useful for global equity or commodity exposures.

Practical Tips for Traders and Investors

• Watch the Fed’s “dot‑chart” commentary – even subtle shifts in language can precede a rate‑policy move.
• Align position sizing with risk‑reward: Aim for a minimum 1:2 ratio on each trade; avoid over‑leveraging in the tight range.
• Utilize a dual‑timeframe approach: Confirm long‑term trend on the daily chart while timing entries on the 4‑hour or 1‑hour frame.
• Set alerts for 1.1925 breach – automated notifications prevent missed breakout opportunities.
• Consider macro‑hedge: Pair EUR/USD exposure with a USD‑linked commodity (e.g., gold) to offset sudden dollar spikes.

Real‑World Example – December 2024 EUR/USD Surge

In early December 2024, the euro rose from 1.1560 to 1.1850 within three weeks after the Fed announced a pause in rate hikes while the ECB held steady. Traders who entered long positions on a close above 1.1700 captured a 2 % upside before the pair pulled back to 1.1765. The move was driven by:

• US inflation cooling faster than expected
• ECB’s “no‑cut” message lending confidence to the euro
• technical breakout above the 1.1700 trendline

the episode underscores how a combination of dovish US data and disciplined ECB policy can trigger a breakout, mirroring the current set‑up around 1.19.

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All data referenced is sourced from the U.S. Bureau of Labor Statistics,Federal Reserve releases,Eurostat,and the European Central Bank as of 23 December 2025.