The EURUSD pair hasn’t risen much despite the US-EU trade deal. This is likely because traders are waiting to see what the tariff rates will be. While the USD has gained some strength recently, it hasn’t had a strong reason for the move. The market is stuck in a range as traders look for new developments that could create a lasting trend. The idea of “shorting the US dollar” is still popular, but it needs a strong trigger to change expectations about rate cuts. The US-EU trade deal has made things clearer for the euro. Some members of the European Central Bank (ECB) have taken a neutral position regarding future rate cuts. They want to see negative data before considering more reductions. Although the market thinks there’s a 65% chance of a rate cut in December, the ECB might keep rates steady due to the trade deal, recent easing measures, and fiscal plans.

Technical Analysis Highlights

Looking at technical analysis, the daily chart shows important support at 1.1575, which can affect price movements from both buyers and sellers. The 4-hour chart indicates a break in minor support at 1.1720, hinting at bearish sentiment related to trade updates. The 1-hour chart does not offer much new information, mainly showing resistance and support testing. Upcoming US economic data—like job openings, consumer confidence, GDP, and employment figures—could be triggers for market movement soon. We think the market is absorbing the news of the trade deal, which many expected. Recent data from CFTC shows that speculative short positions against the dollar are near multi-year highs. Therefore, the path of least resistance might point to a further USD rally. A short squeeze could increase any upward movement for the dollar. On the European side, officials are signaling a pause in further rate cuts. Recent comments from central bank members have pointed out that core inflation remains stubbornly high, above 5%. This feedback pushes back against market expectations for a rate cut soon. The likelihood of a December cut has dropped below 50% in the overnight index swap market, indicating that traders are reassessing the bank’s plans.

Bearish and Bullish Trading Strategies

For traders who are bearish, the old support level around 1.1720 is now a great opportunity. We suggest considering buying put options or opening short positions if the price revisits this area from below. This allows for a clear risk management zone, aiming for the crucial support level at 1.1575. On the other hand, patient buyers should closely monitor the 1.1575 level for signs of a bottom. If the price reaches this key support zone, we will look for bullish reversal patterns before buying call options. This strategy is safer than trying to buy while the price is falling and positions for a potential rebound toward cycle highs. The coming week features significant US economic data that will likely influence the next steps. We are keeping an eye on Wednesday’s FOMC decision and Friday’s Non-Farm Payrolls report, which are expected to show around 170,000 jobs added. Strong numbers could strengthen the dollar and push the pair toward lower support, while weak data might undermine bearish momentum. Historically, when the market becomes as one-sided as the current anti-dollar sentiment, even neutral data can cause sharp reversals. A similar situation occurred in late 2021 when crowded short positions were forced to adjust, leading to a sustained dollar rally. Therefore, traders should stay flexible, as the trigger for a significant move might not be easy to identify. Create your live VT Markets account and start trading now.

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