EUR/USD Forecast for December 5, 2025
Original analysis by: Christopher Lewis | Source: DailyForex.com
Overview:
The EUR/USD currency pair saw a slight pullback during the trading session on December 4, 2025, continuing a recent correction that began after a strong upward move throughout November. The currency pair remains in a relatively elevated position compared to recent months, prompting traders and analysts to evaluate whether bullish momentum can resume or whether further profit-taking and consolidation are imminent.
Market Sentiment and Price Action:
– Late 2025 has been marked by broader U.S. dollar volatility due to mixed macroeconomic signals from the Federal Reserve and uncertainty in global markets.
– The euro gained traction in November based on improved economic indicators from the Eurozone and speculation that the European Central Bank (ECB) may pause policy tightening.
– However, as investors continue to assess inflation metrics, employment reports, and GDP trends from both economies, the current movements in EUR/USD reflect a cautious sentiment.
The chart for December 4 displayed the euro sliding slightly against the dollar, suggesting that the pair is approaching what could be a key technical inflection point. While the larger bullish trend hasn’t been invalidated, several technical considerations point to a potential pause or retracement before any further gains.
Technical Analysis:
Support and Resistance Levels:
– Immediate resistance: 1.10
– Psychological resistance: 1.12
– Immediate support: 1.08
– Key technical support: 1.075
– Long-term structural support: 1.05
The EUR/USD pair remains above a significant support band stretching from 1.05 to 1.08, an area that previously acted as a resistance zone before the breakout in late October and early November.
Price Structure:
– The pair formed multiple higher lows during November, indicative of a bullish structure.
– However, December started with limited upside movement, suggesting that momentum may be slowing.
– If the price fails to clear the 1.10 handle convincingly, buyers may hesitate to enter new positions at current levels.
Moving Averages:
– The 50-day Exponential Moving Average (EMA) is trending upward and currently sits below the price, offering dynamic support.
– The 200-day EMA is also rising but is further below, providing a longer-term floor in case of more extended pullbacks.
– The current setup of the short-term moving averages above the long-term ones confirms a bullish bias.
Momentum and Volume Indicators:
– Relative Strength Index (RSI) is hovering around the 60 level, indicating moderate bullish momentum without reaching overbought levels.
– Moving Average Convergence Divergence (MACD) remains in bullish territory, though the histogram is starting to show signs of contraction.
– Trading volume appears to have decreased slightly compared to the November rally, typically associated with consolidation or uncertainty.
Fundamental Drivers:
Federal Reserve Outlook:
– U.S. economic data in recent weeks has given mixed signals. Some inflation measures are decelerating, while others remain sticky.
– U.S. job growth has slowed, and wage gains have stabilized, leading investors to speculate that the Fed might be closer to ending rate hikes or even considering cuts in 2026.
– Slowing growth projections for Q4 2025 are also fueling the argument for a less aggressive Federal Reserve.
ECB Policy and the Eurozone:
– The European Central Bank has signaled a potential pause in policy tightening as inflation eases across key EU member states.
– Germany and France, the two largest economies in the region, have shown signs of nascent recovery after grappling with supply chain issues and energy impacts earlier in the year.
– Improved Eurozone PMI numbers are lending support to the euro.
– ECB members have expressed caution about cutting rates too early, prioritizing anchoring inflation expectations.
Geopolitical Considerations:
– Eurozone political developments, including upcoming elections in several member
Read more on EUR/USD trading.