EUR/USD Climbs Above 1.1750 on Eurozone Data Surprise, Fed Cuts in Focus

Summary:

EUR/USD extended its rally above 1.1750 after a sharp upside surprise in Eurozone industrial output, with bullish technical signals and growing expectations of US rate cuts keeping the dollar on the defensive ahead of a heavy macro week.

Buy EURUSD

EXP

Trading

1.17600

ENTRY

1.19000

TGT

1.16200

1.17571 +0.00040 +0.03%

Point

Flat

1.16200

CLOSING

1.17600

ENTRY

1.19000

TGT

The euro extended its recent advance against the US dollar at the start of the new week, with EUR/USD trading firmly above the 1.1750 handle as the US session approached on Monday. The pair hovered just below last week’s peak at 1.1762, underscoring the market’s increasingly constructive stance toward the single currency after a run of upbeat Eurozone data and persistent softness in the greenback.

The immediate catalyst for the move came from a stronger-than-expected Eurozone industrial production report, which helped lift broader risk sentiment and reinforced the narrative that parts of the euro area economy may be stabilising after a prolonged period of weakness. According to data released by Eurostat, industrial output in the bloc rose by 0.8% month-on-month in November, a sharp acceleration from October’s modest 0.2% increase and well above market expectations for a near-flat 0.1% gain. On an annual basis, production expanded by 2%, up from a revised 1.2% in October, providing a rare upside surprise in a dataset that has frequently disappointed investors over the past year.

The data offered some reassurance that easing inflation, improving real incomes and looser financial conditions are beginning to filter through to the real economy, particularly in manufacturing-heavy economies. While one month does not make a trend, the strength of the release was sufficient to support the euro at a time when positioning had already turned more favourable.

From a broader perspective, EUR/USD has been consolidating gains after rallying nearly 2% over the past three weeks. The pair’s recovery has been driven as much by US dollar weakness as by euro-specific factors. Markets have continued to price in a higher probability of additional interest rate cuts by the US Federal Reserve in 2025, especially as recent US data has pointed to cooling inflation pressures and a gradual slowdown in labour market momentum. Adding to the dollar’s headwinds are persistent political and institutional uncertainties, including growing speculation that Fed Chair Jerome Powell could eventually be replaced by a more dovish successor, a scenario that investors see as limiting the upside potential for US yields over the medium term.

That said, caution remains a defining feature of market behaviour. Traders appear reluctant to take aggressive directional bets ahead of a dense run of high-impact macroeconomic releases later this week. The focus will be squarely on the long-delayed US Nonfarm Payrolls reports for October and November, due on Tuesday, which are expected to provide clearer insight into the true state of the US labour market after months of data distortions. This will be followed on Thursday by the November US Consumer Price Index, a key input for Fed policy expectations.

Thursday also brings a European Central Bank policy decision, adding another layer of complexity for EUR/USD traders. While no immediate policy change is expected from the ECB, investors will scrutinise President Christine Lagarde’s guidance for clues on the timing and pace of potential rate cuts in 2025. Any hint that the ECB is less inclined to ease aggressively than the Fed could further support the euro, while a dovish tilt could cap recent gains.

Technical Analysis

From a technical standpoint, the near-term outlook for EUR/USD remains constructive despite some intraday consolidation. The pair continues to trade above its 50-period exponential moving average (EMA50), a dynamic support that has helped underpin the recovery. Price action is also aligned with a minor ascending trendline, suggesting that bullish momentum is still intact.

Importantly, the pair has repeatedly found buyers on pullbacks near the 1.17198 support zone, highlighting strong demand at lower levels. This behaviour points to a market that is increasingly comfortable accumulating euros on dips rather than chasing the dollar higher. A sustained break and daily close above 1.17629 would confirm a continuation of the bullish trend and open the door toward a test of the psychologically significant 1.1900 level.

Momentum indicators favour the upside, with the formation of higher lows reinforcing the case for further gains as long as key support holds. While upcoming US and Eurozone events could inject volatility, the balance of risks in the near term appears skewed toward further euro strength, provided EUR/USD remains above the 1.1720 area.

TRADE RECOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.1760

STOP LOSS: 1.1620

TAKE PROFIT: 1.1900

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

1932

Win Rate

63.79%

P/L Ratio

0.72

Focus on

XAUUSD, EURUSD, GBPUSD

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EUR/USD Climbs Above 1.1750 on Eurozone Data Surprise, Fed Cuts in Focus

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