- The EUR/USD weekly forecast edges higher amid geopolitical risk and Fed worries, as the US dollar weakened.
- Easing US-EU trade war concerns outweighed the upbeat US Q3 GDP and unemployment claims data.
- Coming week, the markets await the FOMC rate decision with major focus on the press conference.
The EURUSD price was driven far more by USD-specific geopolitical risk than by incremental Eurozone fundamentals. The week opened with President Trump threatening military intervention in Iran amid unrest tied to economic collapse and reports of thousands of civilian deaths, warning the US would “come to their rescue” if protesters were “violently” killed.
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He later softened the tone with potential talks, but ended the week by saying, “We have a massive armada heading in the direction of Iran.” He also announced 10% tariffs on eight European countries, arguing Denmark could not protect Greenland from China and Russia and saying levies would rise until a deal for the “complete and total purchase of Greenland” was reached.
By midweek, he claimed a framework had been formed after meeting NATO Secretary General Mark Rutte and took tariffs off the table. However, Denmark’s PM Mette Frederiksen and Greenland’s PM Jens Frederik Nielsen said sovereignty is not negotiable.
A further shock was the threat of 200% tariffs on French wines and Champagne after France signaled it may decline to join Trump’s “Board of Peace,” an organization overlapping NATO and requiring a USD 1 billion payment for a permanent seat. Risk appetite repeatedly deteriorated after each new headline, and the dollar failed to benefit.
Domestic US data were “fine”, but the Q3 GDP was revised to 4.4%, jobless claims rose to 200K, November PCE inflation ran at 2.8% with core at 2.8%, and January flash PMIs stayed expansionary. On the other hand, the White House intensified pressure on the Fed. The Department of Justice subpoenaed Chair Powell and threatened an indictment over HQ renovation testimony. With Powell’s term ending in May and no successor named, markets hesitated to price in confident forward guidance.
EUR/USD Next Week’s Key Events:
- FOMC meeting and press conference
- US durable goods orders
- US Producer Price Index
- Germany Q4 GDP preliminary estimate
Next week, the Fed meeting is the focal point. However, the real catalyst is whether guidance meaningfully shifts March-cut odds and whether Trump names Powell’s replacement around the decision, reframing the entire path of policy and perceived Fed independence.
The Eurozone calendar is light, so Germany’s Q4 GDP and flash January HICP are the key EUR inputs; absent major surprises, EURUSD is likely to remain a barometer of US headline risk, yield repricing, and risk sentiment.
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EUR/USD Weekly Technical Forecast: Buyers to Test 1.1900
The EUR/USD daily chart shows a strong bullish scenario as the price remains well bid above the 20-day MA. The pair broke above the key resistance at 1.1800 and is now eyeing the 2025 peak at 1.1900. On the other hand, the confluence of the 50- and 100-day MAs at 1.1670, followed by the 200-day MA at 1.1590, continues to act as strong support. The RSI above 60.0 reveals an intact uptrend, with room for further upside.
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Saqib Iqbal
