EUR/USD: Assessing a Weakly Bearish Turn in a Volatile Post-FOMC Climate

The EUR/USD pair has entered a critical juncture as traders weigh the implications of the Federal Reserve's upcoming December 2025 policy decision against a backdrop of mixed technical signals. With the U.S. central bank poised to conclude its balance sheet runoff and potentially deliver its second rate cut of the year, the euro-dollar cross is navigating a fragile equilibrium between bearish momentum and lingering bullish catalysts. This analysis examines the formation of key bearish patterns, critical support/resistance levels, and risk management strategies, while contextualizing the FOMC's role in shaping near-term volatility.

Bearish Technical Patterns and Price Action Signals

The EUR/USD's recent price action has exhibited a confluence of bearish technical indicators. A triple top pattern has emerged near the 1.1680–1.1700 resistance zone, with repeated failures to break above this level reinforcing a bearish bias. This structure, coupled with a descending channel that has constrained the pair to lower highs, suggests sustained selling pressure. The 50-day exponential moving average (EMA) at 1.1346 has also acted as a dynamic resistance, further constraining upward momentum.

A critical development is the breakdown of the descending channel's lower boundary, which has triggered a retest of the 1.1505–1.1497 support cluster. A confirmed close below this level could validate a broader bearish scenario, with the next target at 1.1435. Meanwhile, the formation of a head-and-shoulders pattern-completed by a neckline break below 1.1590-adds to the bearish case, suggesting a potential decline toward 1.1468.

Key Support and Resistance Levels

Technical analysis underscores the importance of several pivotal levels. Immediate resistance sits at 1.1631 and 1.1662, with a breakout above 1.1679 signaling a potential shift in sentiment. Conversely, critical support levels include 1.1505 (a psychological floor) and 1.1497–1.1468, where a failure to hold could accelerate the downtrend. The 1.1435 level, a prior intraday low, represents a deeper target for bears according to forecasts.

The Fed's Summary of Economic Projections (SEP) and dot plot will add clarity to the 2026 rate path, influencing how these levels are tested. According to analysis, a dovish outcome-such as a more aggressive rate-cutting trajectory-could temporarily bolster the euro, while a hawkish pivot might reinforce the dollar's dominance.

Risk Management in a Volatile Climate

Given the high volatility surrounding the December FOMC meeting, traders must adopt disciplined risk management strategies. Position sizing should be minimized to account for potential whipsaws, particularly around the release of the Fed's policy statement and minutes. Stop-loss orders placed just above key resistance levels (e.g., 1.1631) can limit downside risk, while trailing stops near dynamic support levels can lock in gains.

Monitoring liquidity zones via tools like Bookmap is also critical, as sudden shifts in order flow during FOMC events can amplify price swings. For instance, a surprise dovish bias from the Fed might trigger a short-covering rally toward 1.1600, but a failure to hold above this level could reignite bearish momentum.

FOMC Implications for Trade Execution

The December meeting's outcome will directly influence EUR/USD volatility. While markets currently price in a 25-basis-point rate cut, Chair Powell's caution about "uncertainties in incoming data" suggests a guarded approach. A delayed or smaller-than-expected cut could strengthen the dollar, testing the 1.1505 support. Conversely, a dovish surprise-such as a 50-basis-point cut-might temporarily push the euro toward 1.1679.

Traders should also consider the non-farm payrolls (NFP) data, scheduled for release ahead of the meeting. According to market analysis, weak employment figures could pressure the dollar, creating a short-term buying opportunity for the euro. However, a strong NFP report would likely reinforce the Fed's hawkish tilt, extending the bearish bias.

Conclusion

The EUR/USD's weakly bearish turn is underpinned by a combination of technical patterns, key support/resistance dynamics, and the looming FOMC decision. While the triple top and descending channel formations suggest a higher probability of a decline toward 1.1435, traders must remain vigilant to the Fed's policy signals and macroeconomic data. A disciplined approach-balancing technical analysis with adaptive risk management-will be essential in navigating this volatile environment.