The EURUSD pair saw ups and downs this week. At one point, the price fell but found support at its 200-hour moving average, a broken trendline, and the high of a swing area. This support helped the price rise on Friday.

Upward Momentum

The upward momentum pushed the price above a swing area between 1.1692 and 1.1703, reaching a high of 1.0714. Although there was some downward movement, the price stayed above the swing area, which will act as strong support for the coming trading week. If this level holds, buyers will likely remain in control. If the price does drop, it will target the 100 and 200-hour moving averages at 1.1666 and 1.1649. Holding these levels would still show that buyers are present, though their strength may lessen. The next key upside target is 1.1787, which aligns with the swing high from July 24 and is similar to levels seen in early July. The overall technical outlook currently supports buyers. Buyers have control of the EURUSD, keeping the price above the crucial area of 1.1692 to 1.1703. As we move into the following weeks, this level is critical. Staying above it suggests the upward momentum will continue. Technical strength is supported by fundamental news. Recent data indicated that Eurozone inflation for July 2025 was higher than expected at 2.5%, making a rate cut by the European Central Bank less likely. This is in stark contrast to the news from the United States.

Fundamental Drivers

On the other side, the latest US Non-Farm Payrolls report for July 2025 showed only 160,000 new jobs, far below the 200,000 predicted. This weak labor data increases the chances that the Federal Reserve might consider reducing interest rates before the year ends. This difference in policy is pushing the EURUSD higher. For traders using derivatives, buying call options with a strike price close to the next target of 1.1787 might be a good strategy. A bull call spread could also help reduce trade costs while limiting potential profits. These positions would benefit if the upward trend continues as expected. However, we need to keep an eye on the downside. If the price breaks below the support zone at 1.1700, the bullish outlook will weaken. In that case, traders might consider buying put options or creating bear put spreads to hedge against or bet on a drop toward the 1.1649 moving average. Looking back, we observed similar patterns throughout 2024 as the market reacted to inflationary and employment data from both central banks. The sharp interest rate hikes in 2022 and 2023 created a sensitive environment where any signs of economic weakness can quickly shift expectations for policy. This is the environment we are navigating today. Create your live VT Markets account and start trading now.

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