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Dynamic Support Confluence Signals Potential for New Bullish Leg
Central Bank
Economic
Summary:
The 200-period MA is particularly noteworthy; it has recently functioned as a critical dynamic support, acting as a springboard for price action.
Buy
TradingEURUSD
EXP
1.17229
Entry Price
1.18200
TP
1.16800
SL
1.17148 +0.00080 +0.07%
0
Point
Flat
1.16800
SL
CLOSING
1.17229
Entry Price
1.18200
TP
The European Central Bank (ECB) maintained its key interest rates for the fourth consecutive meeting, keeping the Deposit Facility at 2.00%, the Main Refinancing Operations rate at 2.15%, and the Marginal Lending Facility at 2.40%, fully aligning with market expectations.
In its accompanying policy statement, the ECB Governing Council reaffirmed its steadfast commitment to ensuring inflation stabilizes at its 2% medium-term target. Policymakers emphasized a data-dependent, meeting-by-meeting approach, noting that future rate path decisions will hinge on incoming economic and financial data, the evolving inflation outlook, and the underlying strength of price pressures.
During the post-meeting press conference, President Christine Lagarde clarified that there was no discussion regarding rate hikes or cuts during this session. She underscored that the central bank cannot provide explicit forward guidance due to current levels of heightened uncertainty. Lagarde described the Eurozone economy as resilient but cautioned that a challenging global trade environment is likely to stifle growth. Furthermore, she noted that while the inflation outlook remains more uncertain than usual, a strengthening Euro could eventually act as a tailwind to help alleviate inflationary pressures.
U.S. labor market data presented a complex, mixed narrative this week. Initial Jobless Claims fell to 224,000, edging out the 225,000 forecast and improving upon the previous 237,000. However, Continuing Claims rose to 1.897 million—higher than the previous 1.83 million—while the four-week moving average ticked up slightly to 217,500.
Fed Governor Christopher Waller remarked on Wednesday that policymakers are in no rush to ease policy aggressively, suggesting a cautious approach as long as inflation remains above target. He estimated that interest rates could eventually be lowered toward a neutral level, which he places approximately 50–100 basis points below current rates. Meanwhile, the search for the next Fed Chair continues; President Donald Trump indicated a preference for White House Economic Advisor Kevin Hassett or former Governor Kevin Warsh, though Governor Waller is also reportedly being interviewed for the role.
Amidst these shifts, Chicago Fed President Austan Goolsbee expressed optimism regarding the latest CPI data, suggesting that if the trend holds, it could pave the way for more cuts in 2026. Conversely, Atlanta Fed President Raphael Bostic labeled the latest employment figures a "mixed bag," maintaining his preference for steady rates as firms continue to pass rising input costs on to consumers to protect profit margins.
Technical Analysis
The EUR/USD pair appears to be nearing the conclusion of a technical correction, finding firm support around the 1.1707 zone—a level that successfully repelled downward pressure in recent sessions. This failure to breach lower support, coupled with a bullish rejection from this area, suggests the path of least resistance is back to the upside. The primary objective for this potential new leg is the 0.618 Fibonacci expansion at 1.1821. This projection is significant as it represents a classic market structure target where impulsive moves often culminate.
On the 1-hour chart, the 100-period and 200-period Moving Averages (MAs) are currently situated at 1.1741 and 1.1710, respectively. The 200-period MA is particularly noteworthy; it has recently functioned as a critical dynamic support, acting as a springboard for price action. Given that this same moving average served as a catalyst for a rally between December 8th and 10th, a repetition of this technical pattern could provide the necessary momentum to launch a new bullish leg toward the 1.1821 target.
Trading Recommendations
Trading direction: Buy
Entry price: 1.1722
Target price: 1.1820
Stop loss: 1.1680
Validity: Dec 30, 2025 15:00:00
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