**EUR/USD Positive Indicators** The 14-day RSI stands at 63.92, indicating positive momentum as it remains above the midpoint. While it has cooled from recent highs, it still suggests buyers are in control. The nine-day EMA has moved above the 50-day EMA, reinforcing a bullish trend. EUR/USD remains above both averages, maintaining a short-term uptrend. The upward-sloping nine-day EMA offers dynamic support. Staying above it keeps the path to higher prices open. EUR/USD may reach 1.1800 and possibly hit a three-month high of 1.1808. Further gains could aim for 1.1918, the highest level since June 2021, followed by 1.1930. On the downside, breaking below the nine-day EMA and the lower channel boundary could weaken momentum. This might test the 50-day EMA at 1.1673 and potentially the three-week low of 1.1589. **Euro Market Context** Today, the Euro is weakest against the Australian Dollar. Percentage changes of the Euro against major currencies are noted. As of December 29, 2025, the EUR/USD pair is testing a crucial support level near the nine-day EMA at 1.1757. Although the overall trend has been bullish, momentum has been slowing for four sessions, indicating a crucial moment ahead in the coming weeks. This weakness in the Euro may be supported by recent data showing a gap between central bank views. The latest December 2025 estimates reveal Eurozone inflation has dropped to 2.1%, almost at the ECB’s target, possibly leading to rate cuts in 2026. In contrast, US core PCE inflation remains steady at 2.8%, backing the Fed’s stance on keeping rates high for longer. The strong US non-farm payroll report from early December 2025, which added over 200,000 jobs, supports the dollar’s strength. Given this economic situation, breaking below the 1.1757 support level seems likely. Traders should closely monitor this level for signs of a deeper correction. For those expecting a bounce, buying call options with a strike price above 1.1800 could be a low-risk strategy to profit from a move towards the December 24th high. This plan relies on the nine-day EMA holding strong. The Relative Strength Index is lower but still above 50, indicating some buying power remains. On the other hand, if the pair breaks decisively below 1.1757, buying put options may be a wise move. This strategy would target a decline towards the 50-day EMA at 1.1673, aligning with fundamental pressures from the differing US and Eurozone economies. **Market Liquidity and Speculator Behavior** It’s important to note that market liquidity is currently low due to the holiday season, but it is expected to rebound in the first full week of January 2026. Historically, this increase in volume can lead to significant market movements as new positions are opened for the year. Recent CFTC data from before Christmas indicated that large speculators have started to reduce their net-long Euro positions, suggesting a shift in sentiment may be underway. Create your live VT Markets account and start trading now.

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