The EURUSD continues to rise, hitting a peak of 1.1860, which is a 0.84% increase for the day. The price has now surpassed last year’s high of 1.1829, reached in July, making this the highest point since September 2021. With this upward momentum, the next target is the double swing highs from August 2021, which is around 1.1909, just about 50 pips away. The previous high of 1.1829 now acts as immediate support, while a stronger support level is at 1.1788 from the July 24 high.

Potential Risks and Market Reactions

If the pair drops below these support levels, it may disappoint buyers, leading to profit-taking or new selling pressure. Meanwhile, USDJPY has fallen by 0.67%, and USDCHF, the weakest performer, dropped 0.99% to its lowest level since 2011 at 0.78714. The AUDUSD has also reached new highs, testing 2024 trend lines near 0.6687, with recent highs at 0.6684 and 0.6694. Given the breakout in EURUSD, there is a clear chance to bet on more upward movement in the coming weeks. Buying call options with a strike price near 1.1909 seems like a good strategy, especially for contracts that expire in October 2025. The momentum is robust, with the pair at its highest since September 2021. This rise is supported by a general weakness in the US dollar, which appears linked to recent economic data. Last week, the US CPI report for August showed an increase of 2.8%, falling short of forecasts and fueling speculation that the Federal Reserve will keep rates steady through the end of the year. This is in contrast to the European Central Bank, which has indicated it is not in a hurry to cut rates, creating a favorable situation for the euro.

Risk Management and Market Opportunities

To manage risk, we can use the old resistance level at 1.1829 as a key point. If the price drops below this, it would suggest a failed breakout, making it wise to consider selling our calls or buying protective puts. Historically, failed breakouts can lead to swift reversals as disappointed buyers exit their positions. The dollar’s weakness is evident, with the USDCHF pair dropping to its lowest level since the major currency interventions of 2011. This underscores strong selling pressure on the dollar and indicates we should consider buying put options on USDJPY and USDCHF. The breakdown in the Swiss franc pair highlights a significant, long-term shift away from the dollar. We are also monitoring AUDUSD, which is testing a key trend line and highs from 2024. A sustained break above the 0.6700 level would further confirm the weak dollar trend and open the door for additional gains. This broad decline in the dollar represents a major change from the strong-dollar environment seen during the aggressive rate hikes of 2022 and 2023. Create your live VT Markets account and start trading now.

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