EUR/USD Forecast: Technicals and Seasonality Hint at Another Leg to the Downside
Author: Zain Vawda
Date: January 6, 2026
Market Overview
The EUR/USD currency pair has experienced a notable decline since reaching highs of approximately 1.1800 on December 24, 2025. As of January 6, 2026, the pair has fallen around 140 pips, hitting a low of about 1.1660. Analysts suggest that further downside movement is likely.
US Dollar Seasonality
Historically, January tends to be a strong month for the US Dollar, which may contribute to additional downward pressure on the EUR/USD pair. Recent geopolitical tensions, particularly between the US and Venezuela, have increased demand for safe-haven assets, further bolstering the Dollar's strength.
Technical Analysis
From a technical standpoint, the EUR/USD has broken out of an ascending wedge pattern that had been in place since mid-November. This breakout suggests a potential drop of around 160 pips. Currently, the price is encountering resistance at the 100-day moving average, which could signal the beginning of another downward leg.
EUR/USD Four-Hour Chart
On the one-hour chart, traders looking for a favorable risk-to-reward ratio may find opportunities if the price breaks below a specified red zone, with a potential retest providing a tighter stop loss. A four-hour candle close above the 1.1750 level would prompt a reevaluation of the current bearish setup, indicating a possible shift in market structure.
EUR/USD One-Hour Chart
Conclusion
In summary, the EUR/USD pair is currently positioned for potential further declines, influenced by both seasonal trends and technical indicators. Traders should remain vigilant for key price levels that could signal a change in direction.
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