The Euro gained 0.1% against the US Dollar, outperforming many G10 currencies during Friday’s North American session. This comes after a nearly 1.5% drop against the dollar over the past week. Several factors influence the Euro, including concerns about France’s political situation and disappointing trade and industrial production data from Germany. However, the European Central Bank (ECB) has kept a neutral stance, and reduced France-Germany bond spreads suggest confidence in President Macron’s leadership.

Euro Short-Term Support and Resistance

The EUR/USD has support around 1.1550. There is no support between current levels and 1.15, and further down at 1.14. Resistance is minimal between current levels and the mid to upper 1.16s, indicating a potential trading range between 1.1520 and 1.1620 in the near term. The Euro is trying to stabilize against the dollar after a period of weakness. It is performing relatively better than most other major currencies today, following a nearly 1.5% drop in late summer 2025. This earlier decline was driven by France’s political climate and weak German industrial production data from that time. However, the narrowing of France-Germany government bond spreads now reflects confidence in the new prime minister’s ability to handle the nation’s issues. Additionally, recent data showed a 0.7% increase in German factory orders for August 2025, exceeding forecasts and easing concerns about a deeper economic downturn.

Central Bank Policy Support

Central bank policy is also supporting the Euro. The ECB has kept its key deposit rate steady at 3.0% through the third quarter. This has helped stabilize the interest rate spread against the US, where the Federal Reserve is also indicating a pause in its rate cycle. For derivative traders, this suggests a period of lower volatility in the coming weeks. Implied volatility on EUR/USD options has decreased, with the Cboe EuroCurrency Volatility Index falling below 7.0 for the first time since the political unrest in France earlier this year. This environment makes strategies that benefit from a lack of movement, such as selling strangles or iron condors, more appealing. From a technical perspective, we see strong support forming for EUR/USD near 1.1550, above the 1.14 low we hit on August 1st, 2025. With resistance appearing solid in the upper 1.16s, a near-term range between 1.1520 and 1.1620 seems likely. This clear channel makes buying short-dated put options near the top of the range or call options near the bottom a potentially viable strategy. Create your live VT Markets account and start trading now.

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