The EUR/USD is closing December’s trading near the 1.17630 vicinity as it fluctuates within holiday conditions as the New Year and January get ready to greet financial institutions and their sentiment.
The EUR/USD has rattled above the 1.18000 mark the past couple of weeks, but has not been able to sustain the higher apex. However, the recent challenges to the important psychological level has certainly been seen by many inquisitive eyes and is likely a target in the minds of many traders. The EUR/USD stands around the 1.17630 ratio as of this writing as the New Year’s holiday gets set to be celebrated. Trading volumes in Forex will be light until the middle of next week, but the EUR/USD being among the big cats at the speculative table need to always be watched.
The EUR/USD began December near the 1.15850 vicinity. The lower ratio seen in the first week of the month and the value the currency pair now lurks shows that behavioral sentiment has shifted abruptly. The Fed lowered their Federal Funds Rate as expected on the 10th of December, and Jerome Powell said the Fed would be cautious going into January. But even though the mere 25 basis point cut took place, and Powell said something unsurprising, something occurred that not many analysts were expecting – the EUR/USD went higher.
Holidays and Outlook Beyond January
Yes, holiday volumes are certainly causing caution in the EUR/USD currently. The currency pair has slipped back into a range that is below the 1.18000 level and is fighting headwinds. However, the EUR/USD is also well within its higher mid-term range and is still below highs seen in September of 2025. The EUR/USD intriguingly is battling near highs attained in July. What seems to have happened with the EUR/USD is that financial institutions are not paying attention to what Fed Chairman Jerome Powell is saying, but instead are looking and listening to the growing debate in the Fed about the future of interest rates policy.
President Trump is going to be able to replace Jerome Powell in May. And some members of the FOMC committee have been signaling they would like to see lower interest rates, while others of the FOMC who are from the Powell camp speak nervously about inflation. In other words it appears outlook from financial institutions bought the EUR/USD on the basis that the Fed is about to see a policy shift emerge. The holidays have allowed for some reactionary and cautious selling in recent days, but speculators need to look at the results suspiciously.
1.18000 is a Close Target
The coming days and likely the first couple of weeks in January may not be kind to speculators who can get punished by intraday volatility.
- The EUR/USD was at 1.04000 at this time last year.
- But though some might say a clear upwards trajectory has been achieved, it should be remembered at this time in June of 2025, the EUR/USD was essentially trading where it is now located.
EUR/USD Outlook for January 2026:
Speculative price range for EUR/USD is 1.16850 to 1.18400
Day traders should be cautious the next week. The holiday season allows for imbalanced trades to cause sudden storms even in the EUR/USD. The upwards ability of the currency pair has been dynamic in December, but gains even if they are made in January will likely not be quite so robust. The U.S Fed will have an FOMC meeting towards the end of January, but a lot of data will have to be seen before a clue about what the U.S central bank will do can be determined.
Jobs and inflation are important tenets for interest rate policy from the U.S Fed. Looking for slightly higher ground and a retest of the 1.18000 is not illogical for speculators, but bears might believe the 1.17000 could also come into play. Tests of sentiment are certainly coming and the next handful of weeks may prove to be rather choppy for the EUR/USD. Impetus from other directions should be given attention too because the financial markets appear ready for a broad test via investors in January.