EUR/USD Weekly Forecast: Signs of Sentiment Shift While Gains Accomplished

The EUR/USD did gain this past week of trading. While speculators may not look upon at the upwards movement with as a significant outcome, the ability of the EUR/USD to finish around 1.16433 after starting the week near 1.16300 may prove important.

However, there is a risk that the Fed may prove to be more cautious than appreciated, this because Fed Chairman Jerome Powell has continued to proclaim that uncertainty is an appropriate outlook. Yet, a mid-term sentiment shift in outlook is a near certainty because of the leadership change that will come from the Fed.

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Fed Outlook and White House Viewpoints Have Differed

Many Fed observers are starting to note Jerome Powell is losing his grip on Fed policy at this point under the Trump administration, and other decision makers are gaining prominence. And Jerome Powell is going to leave the Federal Reserve this coming spring of 2026 and be replaced by someone who is certainly more apt to believe interest rates should be lower and perhaps more proactive if they feel inflation is not quite the danger the current Fed Chairman has expressed.

The EUR/USD did gain this past week perhaps in a less than powerful move, but the outlook via many financial institutions is likely starting to prepare for a more dovish view to come via the U.S central bank in the months to come. The range of 1.16000 to 1.17000 may be looked at as the guide for equilibrium momentarily, but that could change this week after Wednesday’s Fed FOMC Statement. U.S economic data the past couple of weeks has come in rather lackluster and the White House would like to see lower interest rates if inflation is seen as under control.

Looking Forward and USD Centric Sentiment

While the EUR/USD gained this past week, the ability to be pushed lower on Friday even after the PCE Price Index statistics that met expectations from the U.S is important as a signal. The EUR/USD held onto the gains it made over the past handful of days, but it did not jump significantly.

• This perhaps means financial institutions are still concerned with Fed Chairman Jerome Powell’s outlook to be announced this coming Wednesday. But should analysts be so concerned?
• Powell’s grasp on Fed power is definitely going to evaporate over the coming months.
• If inflation continues to remain under control, the Fed is likely to cut a couple of more times in the coming half year – after the Federal Reserve rate cut this coming week.
• Meaning USD centric weakness sentiment should increase.
• Day traders should not get over confident, but a EUR/USD over the 1.17000 ratio by the end of this week may prove to be a worthwhile speculative wager – please use risk management.

EUR/USD Weekly Outlook:

It appears financial institutions are still practicing a solid dose of caution as the FOMC decision is anticipated this coming Wednesday. The EUR/USD did produce a rather polite sequence of gains this past week in a rather tranquil manner. Day traders should expect to see a greater amount of volatility in the coming days as large players position for the Fed FOMC Statement.

It should be remembered that if the EUR/USD gains leading up to the Fed announcement that this means a lot of the gains will have been baked into the value of the currency pair. Which means the EUR/USD may not see a sustained immediate climb upwards even when (and if) the Federal Funds Rate is cut by the anticipated 25 basis points. If the Fed makes it clear that they will remain cautious (they always are) but are open to continue considering additional interest rate cuts if inflation remains tempered, this could provide the lightning strike in Forex and for the EUR/USD desired. Remember folks, please use solid risk management because surprises are part of Forex constantly.

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