The EUR/USD pair is currently steady around the 1.160 mark. The euro is benefiting from strong liquidity, especially during the recent stock market decline. High-risk currencies like the Australian dollar (AUD) and New Zealand dollar (NZD) have faced greater losses in the G10 currency group. There is potential for the EUR/USD to rise. It is trading below its short-term fair value, with an undervaluation estimated at 0.8%.

Year-End Target For EUR/USD

The EUR/USD target for the end of the year is still set at 1.180. The positive trends usually seen in December may help the pair rise, although this increase may not be as steady as earlier in the year. FXStreet shares insights from market experts and analysts. Promotions and offers are available through their subscriptions. Please remember that the information on FXStreet’s website is for informational purposes only and does not serve as investment advice. They recommend thorough research before making any investment decisions, as they do not guarantee the accuracy or completeness of the information. FXStreet and its writers are not liable for any errors, omissions, or damages arising from using the information. We expect the EUR/USD to remain around 1.1600, and it seems to be undervalued based on current factors. The potential for a rise appears greater than the risk of a fall, especially after last week’s U.S. Consumer Price Index report for October, which came in at 2.8%, slightly below expectations. This lessens the likelihood of any aggressive moves from the Federal Reserve in the short term.

Options Strategy Consideration

For those looking to profit from a possible rise, buying call options that expire in late December or early January is a simple strategy. This allows for potential gains if the pair heads towards the 1.1800 target. The risk is limited to the cost of the options. To keep costs down, consider a bull call spread—buying a call option at a 1.1650 strike price and selling one at a 1.1800 strike price. This reduces the initial cost of the trade but caps the maximum profit at 1.1800. Implied volatility has increased a bit due to recent market uncertainty, but it’s not excessively high for this strategy. This optimistic outlook is supported by strong seasonal trends observed over the past ten years. December has historically been a good month for EUR/USD, as dollar demand often weakens toward the year’s end. In fact, the pair has risen in seven of the last ten December months, adding further confidence to the potential for growth. Create your live VT Markets account and start trading now.

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