EUR/USD Holds Firm as Dollar Weakness Persists
EUR/USD traded steadily on Tuesday, 16 December 2025, as the U.S. dollar remained on the defensive ahead of a busy macroeconomic calendar. The dollar index slipped around 0.2%, hovering near a two-month low, providing ongoing support for the euro. Market participants remained cautious, positioning ahead of delayed U.S. labour data and key inflation releases later this week.
The euro was last seen trading around the 1.1740–1.1760 range, maintaining recent gains as investors reassessed expectations for U.S. monetary policy and the medium-term divergence between the Federal Reserve and the European Central Bank.
Market Focus Shifts to Key U.S. Economic Data
Investor attention is firmly focused on the release of delayed U.S. nonfarm payrolls for October and November, published simultaneously following disruptions caused by the recent government shutdown. These figures are expected to provide crucial insight into the underlying strength of the U.S. labour market and could significantly influence near-term dollar direction.
In addition, upcoming U.S. CPI inflation data will be closely monitored, particularly as bond markets continue to reflect uncertainty around the future path of interest rates. Softer inflation or employment data could reinforce expectations that the Fed is nearing the end of its tightening cycle, potentially extending EUR/USD gains.
Fed Messaging Keeps EUR/USD Range-Bound
While recent Federal Reserve guidance has contributed to dollar weakness, mixed messaging from Fed officials has limited aggressive moves in EUR/USD. Several policymakers, including Williams and Bostic, are scheduled to speak this week, with markets parsing their comments for clues about the 2026 policy trajectory and rate expectations.
As a result, the currency pair has remained broadly range-bound, with traders reluctant to commit to strong directional positions ahead of clearer macro signals.
Consolidation Before the Next Move
From a technical perspective, analysts note that EUR/USD is consolidating near recent highs, suggesting the potential for further upside if key resistance levels are cleared. Daily chart patterns indicate market indecision, with price action forming a tight range around the 1.1750 area.
A sustained break above this zone could reinforce bullish momentum, while a move below near-term support may trigger a short-term corrective pullback. The next directional move is likely to be driven by U.S. data surprises and central bank guidance rather than technical factors alone.
Data-Driven Volatility Ahead
Overall, EUR/USD remains supported by ongoing dollar softness, but near-term direction will depend heavily on incoming economic data. With major releases scheduled on both sides of the Atlantic, volatility is expected to increase as markets adjust year-end positioning.
Traders are likely to remain cautious, balancing expectations of easing U.S. monetary conditions against persistent uncertainty surrounding global growth and central bank policy paths.
