Original article by: DailyForex.com
EUR/USD Forex Signal – December 29, 2025
Outlook on Market Behavior
On December 29, 2025, the EUR/USD pair exhibited a slow and cautious trading behavior. This calm movement continues a pattern that has developed over the holiday season, with traders showing restraint due to low volatility and thin market volume. The general sentiment appears to be one of hesitation, as market participants await potential catalysts that could define price action going into the New Year.
During the Asian session, EUR/USD remained largely static, showing little inclination to move either higher or lower. This trend carried into the European and early U.S. trading hours. With no significant economic reports released during this period, the technical outlook became increasingly important for day traders aiming to find short-term opportunities.
Key Technical Observations
– Price Position Relative to Moving Averages: As of early December 29, EUR/USD traded slightly above its 200-period Exponential Moving Average (EMA) on the 4-hour chart. This suggests an underlying bullish tendency, although the momentum appears fragile as it hovers near a key technical support level.
– Support and Resistance Levels:
– Immediate resistance is located around 1.1140, which has served as a minor obstacle over the past few sessions.
– Key support lies at 1.1045, a significant inflection point observed in previous weeks.
– A break below this support may trigger a sharper decline toward the next support area at 1.1000.
– RSI (Relative Strength Index): The 4-hour RSI hovered near 52. This midline reading indicates a largely balanced market, showing neither overbought nor oversold conditions. It aligns with the overall range-bound behavior of the pair.
– MACD (Moving Average Convergence Divergence): While the MACD trend is slightly bullish, the histogram suggests weakening momentum. This may hint at a potential short-term consolidation or reversal unless buying interest resumes strongly.
– Price Action: Recent candles show indecision, with mixed wicks and relatively small bodies. This price behavior reflects a lack of strong conviction from either buyers or sellers.
Trade Recommendations from December 29, 2025
Long Trade Setup:
– Entry Condition: Enter a long trade if EUR/USD reaches and sustains a level above 1.1145 with solid bullish candlestick confirmation on the 30-minute to 1-hour charts.
– Rationale: A successful breakout above 1.1145 would indicate upward momentum continuation, potentially supported by trend-following algorithms and stop-loss orders being triggered from short sellers.
– Stop Loss: Consider setting the stop loss below 1.1110 to allow for minor retracements without terminating the position prematurely.
– Take Profit Zones:
– First target: 1.1170 (previous short-term resistance)
– Second target: 1.1225 (multi-week resistance, psychologically significant)
Short Trade Setup:
– Entry Condition: Enter a short trade below 1.1040 if there is a bearish candlestick formation confirming downside pressure.
– Rationale: A break below this level would demonstrate weakness and a failure to hold recent gains, likely inviting fresh selling pressure from both technical traders and macro-focused participants.
– Stop Loss: Use a stop above 1.1075 to protect against a false breakdown.
– Take Profit Zones:
– First target: 1.1000
– Second target: 1.0950
Market Context: Thin Volume and Holiday Caution
One of the defining themes for the EUR/USD market this week has been the low trading volume associated with year-end holiday conditions. With many institutional players off the trading desk and retail trader participation also muted, price action may not follow usual patterns of behavior. As such, technical analysis might have a more pronounced impact due to the absence of fundamental drivers.
Factors Contributing to Reduced Volatility:
– Lack of High-Impact Economic Reports: There
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