Correction looms for EURUSD with 1.17 as key target

During yesterday’s trading session, the EURUSD pair pushed past 1.18 for the first time since early October. Notwithstanding the foregoing, bulls could not hold the line. The retreat carved out a bearish engulfing pattern on the hourly chart, signaling that a deeper pullback is in the offing. This jingle will gain real traction if the price drops below 1.172, thus opening the door to testing the 1.166–1.167 and 1.17 areas. 

Quotes have already slipped below the 50-period moving average on the hourly timeframe—a clear sign that the previous uptrend has hit a wall, and a correction is in full swing. Technical indicators have also thrown their weight behind dollar buyers. The Stochastic Oscillator is trending south, yet it hasn’t reached oversold levels, while the MACD Indicator shows bearish momentum firmly in control, with no turnaround on the radar. Short positions remain in play as long as prices stay under 1.176.

Yesterday’s US employment report played it safe, holding few surprises. October’s decline of over 100,000 jobs due to the government shutdown was par for the course, just like November’s rebound. Even with the unemployment rate climbing to a four-year high of 4.6%, it’s still well shy of historical averages. Analysts polled by Reuters keep seeing no rush for a Federal Reserve (Fed) rate cut in January—especially with tomorrow’s inflation data poised to drop a bombshell.

The European Central Bank’s (ECB) last meeting of 2025 is also on the docket for Thursday. Traders widely expect monetary policy to stay the same, with a shift in rates next year looking off the table. Although the EU economy has turned a corner, it faces an uphill battle from US import tariffs and a flood of competitively priced Chinese goods seeking new markets outside America. For the euro to climb meaningfully against the dollar, the greenback needs to take a back seat, as the single currency is stuck in neutral for now.

Consider the trading plan down below:

Sell EURUSD near 1.172. Place Take profit 1 at 1.17, Take profit 2 at 1.166 and Stop loss at 1.176.