Eurozone Economic Indicators

Resistance is found at the 50-day EMA of 1.1679, which is close to the nine-day EMA at 1.1681. If the daily price closes above these levels, we could see renewed momentum, targeting 1.1808 and possibly 1.1918, highs last reached in December 2021. The Euro, used by 20 EU countries, is the second most traded currency in the world. The European Central Bank (ECB), based in Frankfurt, influences the Euro’s value through interest rates and monetary policy. Inflation and key economic reports, like GDP and PMI data, also affect the Euro. Additionally, a positive Trade Balance can help boost the currency’s strength. Currently, the EUR/USD pair appears to be bearish, trading below crucial moving averages near 1.1680. The Relative Strength Index (RSI) is not yet oversold, indicating there may still be potential for a short-term decline. This scenario favors strategies that benefit from a drop, with an initial target set at the 1.1589 low from last December. The recent economic data supporting the US Dollar adds to this bearish outlook. The latest US Non-Farm Payrolls report, released on January 2nd, showed job growth significantly exceeding expectations, enhancing confidence in the US economy. In contrast, last week’s German Industrial Production figures for November 2025 fell short of predictions, raising concerns about slowing growth in the Eurozone’s largest economy.

Derivative Trading Strategies

For those trading derivatives, it might be wise to consider buying put options with strike prices at or below 1.1600. Options that expire in late January or February could allow sufficient time for the trade to reach the 1.1589 support level. Selling call options or creating bear call spreads with a strike above the 1.1700 resistance could also be effective for gathering premium while holding a bearish stance. It’s important to manage the risk of a market reversal. While the uptrend is weakening, it is not completely broken. A daily close above 1.1681 would challenge the current bearish outlook and may lead to a squeeze. Setting alerts at this resistance level is key for traders to modify or exit their short positions if necessary. Looking back to mid-2022, we noted a similar decline in momentum when the EUR/USD struggled to stay above its 50-day moving average, leading to a sustained drop. This historical pattern suggests that, if downward momentum strengthens below these key averages, it could lead to significant follow-through. If we break the 1.1589 level, the next crucial support to watch would be the 1.1468 low from last August. Create your live VT Markets account and start trading now.

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