The Euro has stayed stable despite market pressures, with focus shifting to the upcoming ECB press conference. President Lagarde’s comments about the Euro’s strength and potential inflation risks are crucial for EUR/USD movement. Today, the EUR/USD will be tested during the ECB press conference at 14:45 CET. If Lagarde talks about monitoring exchange rates or rising inflation risks, it could affect the Euro, but major changes are not anticipated.

Market Participants’ Outlook

If the Euro drops below 1.1770, it might move into the 1.1700-1.1720 range, but a significant decline is unlikely in the short term. This reflects ongoing assessments by market participants about future currency trends and economic data. The Euro has shown resilience, but the key challenge lies in the upcoming ECB press conference. Currently, EUR/USD is trading around 1.1250, and any remarks from the ECB President regarding the currency’s strength will be important for the market. Inflation in January 2026 has eased to 2.3%, making the bank’s stance on exchange rates especially important. Looking back, the Euro’s steady rise in the second half of 2025 made ECB policy decisions more complex. This history shows the bank is aware that a strong currency can tighten financial conditions and reduce inflation. We are closely watching for any mention of the ECB “monitoring exchange rates,” as this has previously indicated concern.

Traders’ Strategic Approaches

Due to the upcoming event, implied volatility on one-month EUR/USD options has risen to 8.5%, up from a low of 7% last month. This suggests traders expect a more significant price movement than usual, making strategies like buying straddles or strangles appealing. These positions would benefit from a notable price shift in either direction after the press conference. The main downside risk would be any comments about increasing threats to inflation or growth, especially following a 0.1% contraction in Q4 2025 GDP. Such statements have historically weakened the Euro and could push EUR/USD below the 1.1200 support level. Traders who expect this may consider purchasing put options with a 1.1150 strike to control their risk. On the other hand, if the ECB shows concern over persistent wage growth, this could be seen as a hawkish signal. This would likely support the Euro and challenge recent highs around 1.1320. Traders betting on this possibility through call options would see their values rise. Create your live VT Markets account and start trading now.

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