Traders are reflecting on a volatile year for markets, marked by significant swings across major asset classes, with limited movement expected as the year draws to a close. This consolidation in EUR/USD suggests market participants are on pause before the start of the new year, awaiting fresh economic data and central bank guidance in early 2026.
Currency markets are taking it slowly after a volatile 2025.
A significant political and economic change occurred after the start of Donald Trump’s second term as president of the United States, leading to a significant depreciation of the dollar, while the euro experienced a surge.
The joint currency regained its footing after a 7-year struggle. Investors and participants were looking for a more politically stable currency and, despite a prolonged Ukraine-Russia conflict, managed to attract quite immediate inflows.
EUR/USD rose from 1.02 in January to its current 1.17 handle in consecutive waves of buying. This shift was fueled by a sudden pivot in sentiment: while the Old Continent found common ground in politics and strategy, the US shifted toward an increasingly isolationist trade policy.
Not seeing much movement since reaching its peak right ahead of the September meeting, the most traded pair has been moving sideways as traders look for further directional clues in 2026.
With the winter holidays restricting volumes further, momentum is subdued, and prices are holding tight within a 1,000 pip range between 1.17 to 1.18.
With monetary policy being held constant by the European Central Bank, participants will be focusing heavily on US policy to dictate dollar flows.
In 2026, markets will likely observe economic activity in the United States, monitoring inflation and employment closely to determine whether more upside is to come for Fiber, or if more downside mean-reversion will occur.
There will be some attention on movements around the 4H 50-period moving average while waiting for volumes to return at the beginning of January 2026.
EUR/USD 4H chart, December 29, 2025. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
- Range resistance zone around 1.18 (+/- 150 pips)
- 1.18080 Christmas week highs
- 1.1830 June 2025 highs
- 2025 extremes 1.19188
Support levels
- 1.1750 mid-range and 4H 50-period moving average
- 1.1650 to 1.17 range Lows
- 1.1550 to 1.16 Key support
- 1.1475 to 1.15 November support
This article and its contents are intended for educational purposes only and should not be considered trading advice. Forex trading is high risk. Losses may exceed deposits.
