EUR/USD traded near 1.1620 in Asian trading on Friday after modest losses in the prior session. The daily chart keeps a bearish tone as the pair stays inside a descending channel.
Near-term conditions remain mildly bearish. Price is below the nine-day EMA and under a flattening 50-day EMA.
The 14-day RSI is near 35 and remains below 50. This points to ongoing bearish pressure rather than an oversold washout.
Support levels include the seven-month low at 1.1468 and the channel floor near 1.1440. A break lower would keep focus on further downside.
Resistance sits at the nine-day EMA at 1.1686, then the 50-day EMA at 1.1753 and the channel ceiling near 1.1790. A move above the channel would shift bias higher, with 1.2082 as the next area, the highest since June 2021.
The technical analysis was produced with the help of an AI tool.
Looking back at the analysis from late 2025, we can see the bearish sentiment was justified at the time. The pair did indeed test the lower bounds of that descending channel, pressured by the Relative Strength Index staying below 50. Those technical signals correctly pointed to continued weakness throughout that period.
However, the fundamental picture has shifted dramatically since then, forcing a breakout from that channel in early 2026. Recent Eurozone flash CPI data for February 2026 showed inflation holding firm at 2.7%, prompting more hawkish commentary from the European Central Bank. This contrasts sharply with the latest U.S. Non-Farm Payrolls report, which showed job growth slowing to just 160,000, increasing bets on a Federal Reserve rate cut by the third quarter.
For the coming weeks, we see opportunity in buying call options to capitalize on further upside. With the pair now consolidating above 1.1850, a move toward the 1.2082 level mentioned in the old analysis seems increasingly likely. Traders could consider July 2026 calls with a strike price around 1.2000 to capture this expected momentum.
To manage risk against a sudden reversal, constructing a bull call spread would be a prudent strategy. This involves buying a call at a lower strike price and simultaneously selling one at a higher strike, capping potential profit but significantly reducing the initial cost. Alternatively, holding protective put options below the 1.1790 level, which was the old channel resistance, can hedge long spot positions.
The divergence in central bank policy is also pushing up implied volatility, which makes options pricing more dynamic. We should monitor this closely, as rising volatility increases option premiums but also presents greater profit potential on directional trades. This environment favors strategies that can benefit from both the expected upward price movement and the heightened market uncertainty.
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