EUR/USD Weekly Forecast: December 21–26, 2025
By: Robert Petrucci, originally published on DailyForex
Overview
The EUR/USD currency pair exhibited continued range-bound behavior during the week of December 14–20, 2025. The pair trended slightly downward after initially testing higher resistance levels near 1.1030, only to reverse and approach the 1.0965 region by the end of the trading week. Mixed economic data, shifting investor sentiment regarding inflation and interest rates, and seasonal market dynamics contributed to price fluctuations.
Looking ahead to the week of December 21–26, 2025, the market is expected to slow down considerably due to the Christmas holiday. Lower trading volumes could lead to more volatile price swings, given that fewer participants are in the market. Traders and investors should remain cautious during this period when technical and psychological support and resistance levels may be more easily violated.
Key Developments Affecting EUR/USD
A variety of fundamental and technical factors influenced EUR/USD performance last week and are likely to remain relevant in the coming trading sessions:
– The U.S. Federal Reserve held its benchmark interest rate steady earlier in December but signaled a potential pivot in 2026. Fed Chair Jerome Powell hinted at the possibility of rate cuts in the first half of the coming year, depending on inflation data.
– European Central Bank (ECB) officials have maintained a more cautious stance. President Christine Lagarde emphasized the need to gather more data before committing to any easing of monetary policy. The ECB’s reluctance to offer any immediate dovish clues contrasts with the more flexible rhetoric from the Fed.
– U.S. economic indicators continue to show signs of cooling inflation. The Consumer Price Index (CPI) remained stable in December, while core inflation edged slightly downward. This reinforced market expectations of an earlier Fed pivot, supporting the euro against the dollar initially.
– German and eurozone composite PMIs softened compared to previous months. The services sector in Germany contracted slightly, while manufacturing output remains weak. These figures continue to paint a picture of economic stagnation in the eurozone, limiting upside potential for the euro.
– Market sentiment ahead of the Christmas holiday has been cautious, as traders opt to lock in profits and reduce exposure. Thin liquidity has led to sharp intraday swings without clear follow-through.
EUR/USD Technical Analysis
From a technical standpoint, the EUR/USD pair has been contained within a relatively tight trading range for most of December. The pair approached upper resistance near 1.1030 early last week but failed to gain traction beyond that level. The 1.1030 level continues to act as a strong psychological and technical barrier.
Support levels remain near 1.0960, with further downside targets at 1.0930 and 1.0900. To the upside, resistance may emerge again at 1.1000, followed by 1.1030 and 1.1065. The Relative Strength Index (RSI) on the daily chart remains balanced around the 50 mark, suggesting no clear momentum in either direction heading into the holiday period.
Key support levels:
– 1.0960: Short-term support tested multiple times last week
– 1.0930: Secondary support in a broader trading range
– 1.0900: Psychological round number and prior low
Key resistance levels:
– 1.1000: Psychological round number often tested intraday
– 1.1030: Recently tested high and key resistance zone
– 1.1065: Stronger resistance not seen since early November
Moving averages provide limited directional guidance at the moment:
– The 50-day SMA is trending horizontally around the 1.0968 level
– The 200-day SMA remains below current price action at 1.0902, reinforcing long-term support
Market Sentiment and Volume
As year-end approaches, institutional participation in the FX
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