The Euro is holding steady just above 1.16, even though the ZEW sentiment survey results were weaker than expected. With a sparse calendar, the market feels calm and shows little short-term risk in either direction. The outlook for the Euro looks positive. Yield spreads have improved since late May, and the options market has confirmed this trend since late June. The relative strength index (RSI) is neutral, sitting around the 50 mark. The 50-day moving average is at 1.1614, showing an upward trend. In the medium term, the Euro ranges from support just below 1.14 to resistance in the lower 1.18s. In the short term, it is between 1.1550 as support and 1.1680 as resistance. Be aware that forward-looking statements come with risks and uncertainties. This information is for informational purposes only and does not serve as an investment recommendation. Always perform thorough research before making investment choices, as you could lose your initial investment. The accuracy and timeliness of this information are not guaranteed, and we accept no responsibility for errors or omissions. With the Euro steady above 1.16, the calm summer market suggests a period of consolidation. The immediate risk is low, keeping the currency within a tight range of 1.1550 support and 1.1680 resistance. In this environment, strategies that take advantage of low volatility—like selling out-of-the-money strangles—could work well in the coming days. We believe the outlook for a stronger Euro remains intact. The latest Eurozone core inflation data for July 2025 is steady at 2.9%, which keeps the European Central Bank on a hawkish track. In contrast, the recent US Non-Farm Payrolls data from early August 2025 showed job growth slowing to a moderate 175,000, indicating a less aggressive Federal Reserve. This positive sentiment is reflected in the derivatives market, confirming a trend we noticed back in late June 2025. The one-month 25-delta risk reversal, which measures market positioning, has narrowed to just -0.1. This indicates a significant drop in demand for puts that would protect against a decline in the Euro, suggesting that traders might consider buying call options or establishing bull call spreads to aim for a rise. Historically, this low activity period is typical for August, similar to the quiet summers of 2023 and 2024. The neutral RSI also affirms this lack of immediate directional pressure. However, such calm periods can pave the way for stronger trends when trading volumes return in September. Given the positive fundamentals and clear medium-term resistance in the lower 1.18s, we think traders should use this quiet time to position themselves for a gradual rise. The upward momentum in the 50-day moving average supports this outlook. Structuring trades to benefit from a move toward the 1.18 resistance in the coming weeks appears to be a smart strategy.

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