EUR/USD Price Forecast: Holds gains near 1.1230 on softer USD; bearish bias persists

The EUR/USD pair maintains its gains near 1.1230 as the US Dollar (USD) remains weaker during the Asian session on Friday. However, traders should exercise caution as the pair has been confined within a range since the beginning of the month, signaling potential caution for bulls. The recent geopolitical risk premium due to the US-Iran standoff over Iran's nuclear program continues to impact the market.

The hawkish stance of the US Federal Reserve (Fed) may help limit further USD losses, thus capping the EUR/USD pair. Nevertheless, concerns about France's deepening debt levels and political uncertainty ahead of next year's election might discourage aggressive bullish bets on the Euro. Furthermore, the technical setup suggests that strong follow-through buying is required to confirm a near-term bottom and the potential for an extension of this week's modest recovery from the 1.1160 region. This was the lowest level since May 2025.

The Relative Strength Index (RSI) is at 50.4, indicating neutral momentum after recovering from oversold readings, while the Moving Average Convergence Divergence (MACD) has turned moderately positive, signaling a potential pause rather than a clear reversal. As a result, any subsequent move up is more likely to face strong resistance near the 1.1280 region, followed by the 1.1300 mark.

If this higher hurdle is cleared, it could trigger a short-covering rally towards the 1.1355-1.1360 zone. However, traders must remain vigilant, as this move up might be seen as a selling opportunity and may dissipate quickly amidst the prevailing bullish sentiment surrounding the USD.