EUR/USD Rally Sustains Above 1.1755 Amid Mixed Central Bank Signals

The EUR/USD pair is maintaining its recovery momentum, trading near 1.1755 during early European hours on Friday. The technical setup suggests buyers remain in control, with the 100-day EMA providing a solid foundation at 1.1635. RSI reading of 59.8 indicates strengthening momentum without entering overbought territory, a favorable condition for uptrend continuation.

Technical Setup Points to Continued Support

EUR/USD is firmly positioned above the Bollinger middle band at 1.1738, where the upper band at 1.1820 represents the immediate resistance zone. Breaking past this level could open the door to extended gains, while any pullback would first encounter the middle band before potential support around 1.1655 near the lower Bollinger boundary.

The recent price action shows tightening Bollinger bands, suggesting a period of consolidation after the recent rally. This compressed volatility typically precedes directional breakouts, making the 1.1820 resistance level a critical point to monitor for trading decisions.

Policy Backdrop Provides Support

The European Central Bank’s December meeting outcome has bolstered EUR sentiment. By holding rates steady and signaling a cautious approach to future cuts, policymakers have effectively removed some downside pressure on the currency. ECB President Christine Lagarde reiterated a flexible, data-dependent stance rather than committing to a predetermined rate path, though market expectations lean toward stable rates through 2026.

In contrast, USD dynamics face headwinds from speculation about potential Fed leadership changes. Should the incoming administration pursue lower interest rates through personnel decisions, the Greenback could face structural weakness, creating a tailwind for EUR/USD through 2025 and beyond.

Key Levels to Watch

Traders should monitor 1.1820 as the primary upside target—a daily close above this level would confirm further bullish extension. On the downside, 1.1655 sits as the initial support floor. As long as price remains above the 100-day EMA slope at 1.1635, the medium-term bias favors buying opportunities on any tactical dips until volatility expansion signals a shift in structure.