The EUR/USD pair is close to its nine-day EMA level, trading around 1.1640. The 14-day Relative Strength Index (RSI) is at 44, indicating weaker momentum, with immediate resistance at the nine-day EMA of 1.1645. After some modest gains in the previous session, the EUR/USD shows limited movement. The pair remains below both the nine-day and 50-day EMA, indicating a bearish trend. Short-term averages are below medium-term ones, suggesting continued downward pressure.

Potential Support Levels

If the EUR/USD falls below the nine-day and 50-day EMAs, it may test the seven-week low of 1.1589. This could lead to support near 1.1468. Conversely, if it breaks above the nine-day EMA at 1.1645, we could see a move towards the 50-day EMA at 1.1670. If buyers take control and push above the medium-term average, the EUR/USD could rally toward the three-month high of 1.1808, last reached on December 24, with a potential target of 1.1918, the highest since June 2021. Today, the Euro has gained slightly against the US Dollar, British Pound, and Japanese Yen, showing its strongest position against the British Pound over other major currencies. Currently, the EUR/USD pair struggles near the 1.1645 resistance level. The RSI indicates momentum is fading, which may lead to a downward move in the coming weeks. Traders should consider positions that would profit from a declining Euro. A critical level to monitor is the December 2025 low, around 1.1589. If it breaks below this support, further selling might occur, targeting the 1.1468 area. This situation makes buying put options with a strike price around 1.1550 or 1.1500 an appealing strategy for the next few weeks.

Fundamental and Technical Influences

The recent weak technical indicators align with disappointing economic data. Last week’s Eurozone flash PMI came in at a low 48.2, signaling contraction, while the latest US non-farm payroll report added 210,000 jobs. This reinforces the Federal Reserve’s firm stance, with a growing gap between the ECB’s dovish approach and the Fed’s data-driven policy favoring the US dollar. Caution is warranted regarding a possible short squeeze if the pair rises above the 1.1670 level, the 50-day moving average. A sustained move above this level would counteract the current bearish outlook and may signal a change in momentum. Traders might consider buying short-dated call options with a strike above 1.1700 as a cost-effective way to position for this potential reversal. This scenario is reminiscent of 2022 when aggressive Federal Reserve rate hikes widened the policy gap with the European Central Bank. During that time, the EUR/USD fell significantly, dropping below parity for the first time in twenty years. While we do not anticipate such a drastic shift now, historical trends suggest a strategy favoring dollar strength against the euro. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now