Title: EUR/USD Weakens Below 1.1750 Following Release of Federal Reserve Minutes
Original Author: FXStreet News Team
Original Article: https://www.fxstreet.com/news/eur-usd-softens-below-11750-after-fed-minutes-202512302316
The EUR/USD currency pair saw a notable decline in late December, falling below the 1.1750 mark after investors absorbed the latest minutes from the U.S. Federal Reserve‘s December policy meeting. The release sparked renewed demand for the U.S. dollar, pushing the euro lower as market participants recalibrated their interest rate expectations and risk appetite. The shift was driven primarily by the Fed’s hawkish tone, which continues to support dollar strength at the expense of major counterparts like the euro.
This article reviews the key elements influencing the euro-dollar exchange rate, provides insight into the Federal Reserve’s policy stance, and outlines potential short-term and long-term implications for the Forex market, with a particular focus on the EUR/USD pairing.
Fed Minutes Release and Market Reaction
The U.S. Federal Reserve released the minutes of its December policy meeting earlier in the week. In these minutes, market participants found more hawkish signals than many had anticipated. The central bank’s concerns about persistent inflation and its openness to rate hikes sooner than previously expected had a direct impact on financial markets, particularly the U.S. dollar.
Highlights from the Fed minutes included:
– Increasing concern among policymakers about elevated inflation readings in the final quarter of 2025
– Acknowledgment that labor markets remain tight, with unemployment trending lower than pre-pandemic levels
– The suggestion that stronger economic growth and reduced slack could justify tapering of asset purchases at a faster pace
– An openness among several committee members to consider raising interest rates earlier or more aggressively than initially forecast
These revelations boosted the U.S. dollar almost immediately, as traders interpreted the minutes as a signal that Fed tightening could arrive sooner than expected. The dollar’s surge weighed heavily on the euro, pressing the EUR/USD pair down through key psychological and technical support levels.
EUR/USD Technical Overview
Before the release of the Fed’s meeting minutes, the EUR/USD pair was trading near 1.1775 in relatively quiet post-holiday markets. However, the hawkish nature of the minutes resulted in a broad wave of dollar demand, pushing the pair below the 1.1750 threshold. The move marked a bearish technical development and prompted analysts to reevaluate near-term forecasts for EUR/USD.
Technical analysis suggests:
– Immediate support for EUR/USD lies around 1.1720, followed by the more critical level at 1.1700, which marks the lower boundary of a month-long trading channel
– Resistance levels are now seen around 1.1775 and 1.1800, both of which provided strong barriers to upside movement in recent weeks
– Oscillators such as the Relative Strength Index (RSI) have turned bearish, indicating increased downward momentum
– Price action on the 4-hour and daily charts now shows a bearish trend structure with lower highs and lower lows forming after the rejection at 1.1800
Macroeconomic Factors Impacting the Pair
Beyond the immediate reaction to the Fed minutes, several underlying macroeconomic themes continue to influence the EUR/USD value. Key among these are differentiated monetary policy paths between the Fed and the European Central Bank (ECB), inflation data from both regions, and risk sentiment linked to global growth forecasts.
Diverging Monetary Policy Outlooks
– The Federal Reserve signaled readiness to normalize monetary policy more swiftly should inflation pressures persist. With the unemployment rate falling and PCE inflation still above the 2 percent target, market participants now see rate hikes as possible by mid-2026
– In contrast, the European Central Bank remains comparatively dovish, with ECB President Christine Lagarde reiterating that inflation in the Eurozone is likely transitory and that monetary support will continue well into
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