The Euro (EUR) is stable around 1.16, just under a recent high from September 2021. This stability is due to changes in central bank policies and easing expectations from the Federal Reserve. The gap between Germany and US 2-year bond yields has narrowed by 15 basis points, which supports the Euro. France’s consumer confidence figures have stayed the same, while new consumer confidence data from the euro area and Germany are expected soon. The Euro’s trend is positive, showing higher lows and higher highs since February. The Relative Strength Index (RSI) is in the mid-60s, indicating room for growth until it hits the overbought level of 70. The 50-day moving average is at 1.1377, which is an important support level. Nearby support is in the 1.1550-1.1520 range, with limited resistance expected until the 1.1720-1.1750 area. Initial analysis shows the Euro has been steadily rising, hovering near a peak not seen since late 2021. This rise is mainly due to changing central bank policies, particularly in the US, where the tightening of monetary policy is slowing down. The narrowing bond yield spread of about 15 basis points between Germany and the US favors the Euro and usually leads to its appreciation when US yields decrease relative to European yields. Consumer sentiment in France has remained flat, and markets are closely watching for similar data from the eurozone, including Germany. While these figures aren’t causing sudden changes, they are good indicators of internal demand and can influence rates expectations and currency direction. The technical outlook supports the current Euro strength. Since February, it has shown a classic upward trend: higher lows and higher highs. The RSI in the 60s suggests there’s still potential for growth before reaching the overbought level of 70, allowing for some upside without being overstretched. From a trend-following view, the 50-day moving average at 1.1377 acts as a solid support. If the Euro stalls or pulls back, traders will look to the 1.1550–1.1520 range for support. Buyers have previously relied on this area, and it might hold again. Resistance should not occur until around 1.1720–1.1750, a range that typically draws selling but hasn’t been recently challenged. Strategically, this suggests a higher likelihood of a continued upward trend unless major changes happen. Current pricing in FX derivatives favors calls over puts. However, as upper boundaries stretch, profit-taking could occur. With implied volatility remaining low, opportunities for positioning with moderate leverage may arise if the spot price moves past short-term resistance. If euro area confidence data surprises positively, trends could strengthen—especially if US data weakens or surprises negatively. In that scenario, adjustments could quicken, particularly in the middle of the yield curve. Skew patterns may become stronger as the spot approaches 1.1750, especially if momentum traders add pressure. What’s encouraging is that the market shows support both technically and through a steady narrative of relative central bank direction. It would be wise to set dynamic stops and avoid overcommitting until we see if 1.1750 presents significant resistance or allows the price to rise with little opposition. Currently, the risk-to-reward ratio is favorable for long positions, at least until the RSI approaches the overbought threshold.

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