Bears hurt the EURUSD exchange rate in thin market trading ahead of the holidays, and investors await the first day of 2026.
EURUSD – Daily Chart
The EUR/USD price has left 2025 on a bearish note, and further selling may follow when markets open. The 1.4193 level is the target for bears, as the trading range to 1.1831 continues.
Recent predictions from investment banks such as Goldman Sachs and Deutsche Bank indicate the potential for a further slide in the dollar this year. That is down to the expectation that the Fed will maintain a dovish tone as other central banks start hiking interest rates.
The Bank of Japan is expected to raise interest rates this month, while the ECB may follow with a hike by the third quarter. Other central banks are expected to maintain a hawkish view, with the Reserve Bank of Australia, the People’s Bank of China, and the Bank of England seeking to tackle inflation.
In contrast, the Federal Reserve is expected to maintain a dovish tone over the next few months as Trump gets set to replace Jerome Powell with a dovish chair. The next key catalyst for the pair will be the upcoming European Central Bank interest rate decision on Thursday.
Economists expect the bank to leave interest rates unchanged at this meeting, as the bloc’s economy is stable and inflation has largely been contained. However, some analysts expect the bank to cut in March, with a Bloomberg analyst writing.
“While the ECB appears reluctant to cut rates again, our view is that the risks to our call for no change are skewed to the downside. We think the central bank is underestimating the threat US tariffs pose to the region’s economy.
