EUR/USD Tests Resistance as Fed Cuts Face ECB's Hawkish Stance

EUR/USD enters 2026 trading near critical resistance levels around 1.0450, gaining 0.2% in early sessions as diverging central bank policies shape market dynamics. The Federal Reserve's anticipated rate cuts for Q1 2026 contrast sharply with the European Central Bank's decision to maintain its current policy stance, creating favorable conditions for euro strength. Market positioning shows increased bullish sentiment on the euro, with speculative long positions rising 15% over the past week. The Dollar Index has retreated 0.5% from December highs, providing additional support for the currency pair. Technical indicators suggest EUR/USD faces immediate resistance at 1.0475, coinciding with the 50-day moving average, while support remains firm at 1.0380. A successful break above current resistance could open the path toward 1.0520, though traders await Friday's US employment data and next week's ECB meeting minutes for clearer directional cues.