The EUR/USD is currently trading at about 1.1700 after bouncing off the 50-day Exponential Moving Average (EMA) of 1.1684. The 14-day Relative Strength Index (RSI) is at 47, indicating neutral market conditions and decreasing momentum. On the daily chart, there’s a bearish outlook since EUR/USD is above the 50-day EMA but below the nine-day EMA. This situation limits any potential upward movement.

Potential Downside Pressure

If EUR/USD drops below the 50-day EMA, it may experience downward pressure, possibly testing a monthly low of 1.1589. Conversely, if it rises, it could reach the nine-day EMA at 1.1724 and aim for a three-month high of 1.1808. Today, the Euro shows a gain of 0.11% against the USD and is performing well against other major currencies, particularly the Canadian Dollar. This technical analysis uses AI for insights, but readers should do their own research. FXStreet notes that investing in markets comes with risks and does not guarantee the accuracy of this information. Investors should be aware that such investments can result in significant losses. The EUR/USD is stabilizing around 1.1700, within crucial technical boundaries. Price support is at the 50-day average of 1.1684, while the nine-day average at 1.1724 is holding back further gains. This narrow range indicates market indecision in the weeks ahead. The neutral RSI of 47 shows a lack of strong momentum, signaling a period of consolidation. Implied volatility for EUR/USD options has dropped, with the CME’s CVOL index for the Euro hitting a three-month low of 6.8% this week. This scenario might favor strategies like selling straddles or strangles to earn premiums by betting that the pair remains in its current tight range.

Market Strategies for Different Scenarios

If EUR/USD falls below 1.1684, it could head toward the December 2025 low of 1.1589. This possibility is supported by recent data showing a surprising 0.5% drop in German factory orders and a stronger-than-expected US ISM Services PMI of 54.5. Traders anticipating this decline might consider buying put options or setting up bear put spreads to manage risk. On the other hand, if the EUR/USD closes decisively above 1.1724, momentum may shift upward toward the December 2025 high of 1.1808. This would indicate a resumption of the overall positive trend after a pause. In this case, buying call options or using bull call spreads could be smart ways to join the potential rally. Keep in mind that the rise above 1.15 in late 2025 marked a significant rebound from previous lows. This consolidation around 1.1700 reflects the market’s assessment of whether that recovery can continue toward levels not seen since mid-2021. The next few weeks will be crucial for setting the tone for the first quarter. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now