EUR/USD Forecast: ECB & US CPI to Drive Price Action, Bulls Remain in Control Above 1.1600 Handle

[Ben Graham]

Most Read: Bank of England (BoE) Preview: A Hawkish Cut in a Stagnating Economy? Implications for the GBP & FTSE 100

EUR/USD has had an interesting day as a stronger US Dollar has pushed the pair down for a retest of support at the 1.1700 handle. However, bulls remain interested and this is evidenced by the bounce back toward the 1.1750 handle as the day wore on.

The rest of this week still brings US CPI and an ECB meeting into the picture. This begs the question, where will EUR/USD be on the last day of 2025? Let us take a look at all the factors that could play a role and shape price action over the coming days.

ECB Meeting Preview

The European Central Bank is widely expected to keep interest rates unchanged tomorrow. Markets have already priced in a stable deposit rate of 2.0%, and nearly all major institutions predict no change. While the decision itself seems predetermined, the meeting is expected to be tense due to significant disagreements within the Governing Council regarding the future path of inflation and interest rates.

The central conflict lies between "dovish" members, who want to cut rates sooner, and "hawkish" members, who advocate for patience. New macroeconomic projections are fueling this debate. Inflation is expected to fall below the 2% target in 2026 and 2027 (around 1.7%), which supports the argument for cutting rates now. However, inflation is projected to rise back above the target in 2028, largely due to delayed carbon pricing regulations.

The "hawks" argue that the Eurozone economy is resilient with growth expected to exceed 1% in 2025 and that the bank should not react to temporary dips in inflation when long-term risks remain. If ECB President Christine Lagarde adopts a "hawkish" tone during the press conference, emphasizing this resilience and a commitment to keeping rates restrictive, it could boost the value of the Euro, potentially pushing the EUR/USD exchange rate toward 1.1900.

For a full ECB Preview, read ECB: Rates on hold, debate heats up

US CPI Release

The BLS office cannot publish monthly inflation figures for October because the recent government shutdown stopped them from collecting the necessary price data.

Instead, they will only release the yearly inflation rate for November, which I expect to rise to 3.2%, up from 3% in September. This increase is largely caused by higher taxes on imported goods and rising insurance premiums.

Despite this rise, inflation isn't expected to climb much further because energy is getting cheaper, rent hikes are slowing, and pay raises are becoming smaller. By the second half of 2026, the inflation rate should fall back down to around 2.5%.

In the short-term though, a spike in inflation could add some strength to the US Dollar.and thus weigh on EUR/USD

zoom_out_map

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Analysis on EUR/USD

Let us start with the technical picture on the four-hour chart

EUR/USD has found significant support at the 1.1700 handle which was the swing high on December 4.

A retest earlier in the day and aggressive bounce highlights this area as crucial to immediate bullish continuation.

The period-14 RSI also bounced back above the 50 level, a sign of bullish momentum.

The four-hour chart below also sees price trading within an ascending channel of sorts. Some may see the channel as a bear flag as well which would hint at a break lower.

However, the overarching macro picture hints at bullish continuation which makes an upside break of the channel seem more likely at this stage.

EUR/USD Four-Hour Chart, December 17, 2025

zoom_out_map

Source:TradingView.com

Support

• 1.1700
• 1.1657 (100-day MA)
• 1.1572

Resistance

• 1.1800
• 1.1919 (YTD Highs)
• 1.2000 (psychological level)

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© 2025 OANDA Business Information & Services Inc.