EUR/USD has bounced back from its six-week low of 1.1589, trading at approximately 1.1610 during the Asian session on Friday. The 14-day Relative Strength Index (RSI) is at 35, suggesting a neutral to bearish trend. Resistance is initially at the nine-day Exponential Moving Average (EMA) of 1.1648. Technical analysis shows that EUR/USD is trading below both the nine-day and 50-day EMAs, indicating a bearish trend. The short-term EMA is below the medium-term EMA, which restricts price recoveries. Bearish pressure will continue if the pair stays below the short-term EMA.

Potential Downside Risks

Downward risks are focused on the support level near 1.1589. If the price drops below this, it could fall to 1.1468, a level last seen in August 2025. On the other hand, breaking above the nine-day and 50-day EMAs at 1.1648 and 1.1673 could relieve some pressure and allow a test of the high of 1.1808 reached on December 24. The heat map shows percentage changes of major currencies against each other. The base currency is in the left column, and the quote currency is in the top row. The euro has increased by 0.05% against the US dollar today. This analysis is provided by a Forex Analyst in New Delhi, delivering insights on market trends. The EUR/USD pair is displaying notable weakness, trading just above its six-week low at 1.1610. Key indicators, like the Relative Strength Index, are showing bearish signals, suggesting that the downward trend may continue. The price is below important moving averages, often acting as resistance and supporting a negative short-term outlook.

Fundamental Factors Impacting Currency Trends

The US dollar’s strength is backed by recent economic data, with December 2025 inflation coming in slightly above expectations at 3.4%. As a result, Federal Reserve officials are in no rush to cut interest rates, which is a strong boost for the dollar. This situation resembles a similar time in late 2024 when differences in monetary policy led to lasting dollar gains. Meanwhile, the Eurozone economy is showing signs of trouble, as December 2025 manufacturing data reveals ongoing contraction. This has led to market speculation that the European Central Bank may have to consider interest rate cuts in the latter half of the year. The growing divide between the Fed’s and ECB’s monetary policies is a key factor weighing on the euro. For derivative traders, the focus for the coming weeks should be on the support level at 1.1589. If this level is broken, it would signal a strong opportunity to consider strategies like buying put options or selling futures contracts. It could also lead to a decline towards the lows of 1.1468 that were last seen in August 2025. Conversely, any upward movements are likely to face strong resistance in the 1.1648 to 1.1673 range. A rally that falters in this area could present an opportunity to establish new bearish positions. A break above this resistance would be necessary to reduce the immediate downward pressure on the pair. Create your live VT Markets account and start trading now.

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