EUR/USD is steady around 1.1650 after five days of losses. The 14-day RSI sits at 39, suggesting a loss of momentum rather than an oversold condition. On the daily chart, the EUR/USD pair is trading below the nine- and 50-day EMAs, which are at 1.1696 and 1.1680 respectively. Although the crossover looks positive, the absence of support from moving averages makes the short-term outlook unclear.

Possible Test of Six-Week Low

The pair could test the six-week low at 1.1589. A daily close below this level might lead to support around 1.1468, the lowest point since August 2025. Initial resistance lies at the 50-day and nine-day averages of 1.1680 and 1.1696. If the pair closes above these levels, it might reach the three-month high of 1.1808 from December 24, then possibly 1.1918, the highest since June 2021. Different currencies have shown slight changes against one another, pointing to small movements in the forex market. These shifts indicate minor fluctuations, with several currencies experiencing slight declines.

Potential Increase in Price Swings

At the end of 2025, EUR/USD struggled around 1.1650 as momentum faded. This trend was reinforced by this week’s US Non-Farm Payrolls report, which revealed the addition of 210,000 jobs in December—more than expected. This data supports a hawkish approach from the Federal Reserve, strengthening the dollar. Bearish signals from late last year, like the RSI dropping to 39, are still relevant. With the pair remaining below the crucial 1.1680 and 1.1696 moving averages, the most likely direction seems to be downward. Traders should keep an eye on the 1.1589 support level, the low from early December 2025, as an important benchmark. Adding to the pressure is the recent Eurozone flash CPI data, showing inflation unexpectedly dropping to 1.8%. This decreases any urgency for the European Central Bank to tighten policy, creating a clear divergence with the Fed. This situation makes selling rallies a potentially effective strategy in the short term. Given this backdrop, strategies that profit from further declines or sideways movement seem promising. Buying put options with strike prices below 1.1589 could target the August 2025 low around 1.1468. Alternatively, selling call spreads above the 1.1808 resistance could capitalize on time decay and the low chance of a rapid reversal. We’ve seen similar policy divergences in the past, like in 2014-2015, which led to prolonged dollar strength. Implied volatility in EUR/USD options may increase as the pair nears these critical support levels. Traders should be ready for potential price swings if the 1.1589 level is decisively broken in the weeks ahead. Create your live VT Markets account and start trading now.

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