The EUR/USD pair rose to about 1.1655 during the European session on Monday, but it stayed below the 100-day EMA. The first resistance is at 1.1665, while support is at 1.1640. The US Dollar is weaker, raising worries about the Federal Reserve’s independence. Traders are waiting for the US CPI inflation report, which could affect the currency pair. Fed Chair Jerome Powell might face criminal charges from his Senate testimony, impacting the USD and boosting the EUR/USD. Additionally, geopolitical issues in Iran may increase demand for safe-haven currencies, influencing the USD. From a technical perspective, the 100-day EMA at 1.1665 signals a slight positive outlook, with prices lingering just below this point.

Factors Impacting the Euro

The Euro, used by 20 EU countries, is the second most traded currency worldwide. Its value is influenced by GDP, inflation, and trade balance data. The European Central Bank (ECB) affects the Euro through monetary policy, with inflation data playing a crucial role in interest rate decisions. A favorable trade balance for the Eurozone could also increase the Euro’s value. Currently, the EUR/USD is testing key resistance levels, hovering near the 100-day Exponential Moving Average at 1.1665. This point is critical for the pair in the upcoming days. Options traders should note the low Relative Strength Index of 41, indicating that upward momentum is weak despite recent price movements. This weakness of the dollar follows last week’s disappointing Non-Farm Payrolls report, revealing that the US economy added only 95,000 jobs in December 2025, far below expectations. This underwhelming data, along with ongoing concerns about the Federal Reserve’s leadership, is putting pressure on the dollar. Consequently, a short-term rise for the EUR/USD seems possible if new data supports this trend.

Influence of the European Central Bank

On the flip side, the Euro is gaining support from a relatively hawkish ECB. The latest Harmonized Index of Consumer Prices for the Eurozone in December 2025 was still high at 3.1%, keeping pressure on the ECB to maintain interest rates. This difference between a potentially hesitant Fed and a steadfast ECB is the key focus. Given the strong technical resistance, buying naked call options is risky. A bull call spread—buying a call at a lower strike price and selling one at a higher strike like 1.1730—could be a safer strategy. This minimizes risks and allows for profit from a slight upward movement through the current barrier. All attention is on this week’s US Consumer Price Index report, a major upcoming event. A higher than expected inflation rate could quickly reverse the dollar’s weakness and push the EUR/USD back down toward the 1.1640 support level. This represents the main risk to any bullish positions established now. Currently, volatility is low, but a decisive close above the 100-day EMA might lead to a rapid increase. We’ve seen similar patterns back in late 2024 when the pair broke through important technical levels as central bank expectations shifted. Positioning with strategies that define risk before such moves could be beneficial. Create your live VT Markets account and start trading now.

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