European currencies have been the winners of this year’s FX trading, with gigantic rallies across the EUR, CHF, and GBP as the Trump Administration stepped back from its defensive role within NATO, particularly regarding Ukraine. Giving up some of its mid-year advance, the euro is still holding above 1.15, a key psychological level, and builds a range around this area as traders look for clarity regarding next year’s Fed cuts.
Amid a lack of fundamental change in European dynamics, the world is turning towards US monetary policy in order to find some change and generate new directions.
The European Central Bank concluded its rate cut cycle in June 2025. Throughout various communications from its voting members, the consensus appears to be in favor of maintaining the Deposit Facility at its current rate of 2% (the rate at which commercial banks can earn through ECB deposits).
Keep in mind that 2% is a rate that Central Banks tend to favor for their neutral rates, in equilibrium with the standard 2% inflation target.
The US still has work to do to return to a 2% inflation rate, which is why Fed Chair Powell and other Fed members have been resiliently holding rates higher. However, as recent private labor data suggests, such as the recent miss in the monthly ADP private payrolls data, labor activity in the US is contracting.
With tariffs seemingly not throwing US prices into a significant and persistent inflation boom, the tone from Federal Reserve speakers and market pricing leans towards gradual cuts in 2026.
FOMC rate pricing through September 2026, current neutral rate odds. December 8, 2025. Source: FedWatch Tool.
2025 has been marked by numerous trends and breakouts across various markets, including currency markets.
However, with the US President Trump-led volatility spikes stabilizing, the end of the year presents more range-bound actions in currencies.
With a lack of significant fundamental surprises in both the US and the Eurozone, EUR/USD is holding within a 2,000-pip range, between 1.15 and 1.17.
The key is to determine if Wednesday’s FOMC meeting will still maintain stable US dollar movement, indicating further sideways action for the upcoming year.
EUR/USD 8H chart, December 8, 2025. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
- 1.1650 to 1.17 Intermediate pivot, range highs
- 1.1750 mid-term resistance
- Main 2025 resistance 1.18
- Sep 2021 highs – resistance 1.19 to 1.1950 zone
Support levels
- 1.1470 to 1.15 pivotal support (range lows)
- 1.1350 to 1.14 main support
- 1.12 May 2025 lows
- 1.10 major psychological support
This article is for general information purposes only, not to be considered a recommendation or financial advice. Past performance is not indicative of future results. It is not investment advice or a solution to buy or sell instruments.
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