Fundamental / Economic Backdrop (short term)
The session is framed by a mixed macro backdrop. The euro area enters year-end with slowing activity in manufacturing and flat services momentum, while inflation trends remain subdued relative to the ECB’s medium-term goals. Rate-cut expectations for early 2026 have softened slightly but remain embedded, limiting strong EUR upside impetus.
In the United States, softer labour-market prints and moderating wage growth have been counterbalanced by firmer consumption and stable core inflation. The USD retains defensive support due to higher relative yields, although recent risk-tone stabilisation has capped broader USD strength.
Immediate catalysts for Friday include:
• US PPI final release and consumer sentiment revisions
• Eurozone industrial production updates
• Ongoing political and fiscal discussions in several euro-area member states, contributing to modest EUR volatility premium
Short-term flows reflect positioning towards USD resilience unless clear evidence emerges of a renewed disinflation impulse or risk-off behaviour that favours the EUR via USD unwinding.
Fundamental / Economic verdict
EURUSD fundamental bias leans mildly downward in the immediate term, with asymmetric risk for intraday USD firmness unless data materially contradicts consensus. Upside EUR impulses likely require softer US data or a benign risk backdrop.
Technical and Market Sentiment (short term)
Spot: 1.1748
EURUSD trades within a short-term descending channel, with lower highs forming since the early-December pivot. The pair retains a downward slope on the 4-hour and daily structures, with momentum oscillators neutral-to-soft and intraday liquidity pockets concentrated below current price.
Key levels
| Type | Level | Notes |
|---|---|---|
| Resistance 1 | 1.1785 | Upper intraday pivot, channel top, confluence region |
| Resistance 2 | 1.1820 | Short-term supply zone; break alters near-term tone |
| Resistance 3 | 1.1865 | Major structural turning point; bullish continuation level |
| Support 1 | 1.1710 | First liquidity shelf; algo-sensitive zone |
| Support 2 | 1.1675 | Key short-term swing low; break triggers momentum selling |
| Support 3 | 1.1620 | Broader corrective target if bearish extension develops |
Market sentiment is neutral-to-soft, with price rejecting 1.1785 repeatedly this week and failure to sustain above the mid-range confirming sellers active on rallies.
Technical verdict
Short-term technical bias remains mildly bearish below 1.1785, with pressure intensifying under 1.1710. Upside structure invalidation requires sustained closes above 1.1820.
Strategy (short term)
Intraday / Friday 12 December – Setup and Trade Ideas
Table presents actionable directional considerations. Levels assume neutrality and non-personified interpretation.
| Scenario | Trigger | Bias | Target Zones | Risk Consideration |
|---|---|---|---|---|
| Intraday Sell | Rejection of 1.1785 | Bearish continuation | 1.1710, then 1.1675 | Maintain stops above 1.1820 |
| Intraday Buy | Sustained break above 1.1820 | Short-term bullish relief | 1.1865 | Avoid fading prematurely; volume confirmation required |
| Breakout Sell | Clean break + retest of 1.1710 | Downside expansion | 1.1675 → 1.1620 | Watch for volatility spikes near US data windows |
Base Case & Risk-Managed Outlook
Base case favours a controlled drift lower while below 1.1785, with 1.1710 at risk of testing during US data hours.
Risk: A sharp decline in US yields or broad USD supply would invalidate the short-term bearish tone and push EURUSD into a recovery phase towards 1.1820–1.1865.
1 Day Outlook Scenarios
| Probability | Scenario | Description |
|---|---|---|
| Higher | Mild bearish continuation | Price trades 1.1700–1.1750, testing liquidity below recent lows |
| Moderate | Range stabilisation | 1.1710–1.1785 rotation persists without breakout |
| Lower | Upside corrective break | Price closes above 1.1820, prompting short-covering |
Summary
Fundamental signals lean modestly USD-supportive into Friday, with eurozone softness and stable US data momentum weighing on EURUSD. Technical conditions also favour a mild bearish bias while price remains capped beneath 1.1785, with 1.1710 a key inflection level. Combined assessment suggests a short-term downward skew unless US data weakens materially or risk conditions shift positively for EUR.
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