EUR/USD might rise towards a two-month high of 1.1804, driven by positive momentum. The 14-day Relative Strength Index sits at 62.11, indicating good upward strength without being overbought. The pair is testing support at the nine-day EMA of 1.1713. Currently, EUR/USD is weak, trading around 1.1720 during the Asian session on Friday. Technical analysis shows a bullish trend on the daily chart, as the pair remains within an upward channel pattern. It is above the nine- and 50-day EMAs, suggesting that the bullish trend is still strong.

Possible EUR/USD Increase

There’s a chance for EUR/USD to reach 1.1804, and possibly even 1.1850. If the support holds, we could see movement towards the 50-day EMA at 1.1644 or hit a three-week low of 1.1589 noted on December 1. Today, the Euro’s performance varies against other major currencies, showing particular weakness against the US Dollar. The heat map below illustrates percentage changes among major currencies, with the left column as the base currency and the top row as the quote currency. This analysis is enhanced by AI tools and market insights. Since EUR/USD is testing a crucial support level near 1.1713, this could be a good opportunity to consider long positions. The pair remains in a clear upward channel, showing that the underlying trend is still positive despite four days of weakness. This suggests the current dip may just be a temporary pause before moving higher. We might look into buying call options with strike prices around 1.1800, perhaps with an expiry in late January 2026, to take advantage of a potential rebound. This bullish outlook is supported by recent data, which showed Eurozone inflation for November 2025 at 2.7%, slightly above expectations, pressuring the European Central Bank to hold off on rate cuts. We recall a similar situation in late 2023, where persistent inflation helped the Euro against a weakening dollar.

Risk Management and Key Levels

If there’s a rebound from the current 1.1700 support area, it will strengthen our bullish view, with an initial target being the recent high of 1.1804. A break above this could move the pair toward the upper channel boundary near 1.1850 in early 2026. The Relative Strength Index at 62.11 demonstrates healthy momentum, with more room to grow before becoming overbought. However, we need to manage our risk if the 1.1700 support fails. This could happen if US economic data, like upcoming December 2025 retail sales figures, come in stronger than expected. A decisive close below the upward channel would suggest we should hedge long positions or start speculative shorts by buying put options. If the 1.1700 support breaks, the next important level to watch would be the 50-day EMA at 1.1644. A drop to this level would indicate a major shift in short-term market sentiment and could bring the three-week low of 1.1589 back into consideration for bearish strategies. Create your live VT Markets account and start trading now.

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