The EURUSD has recently pulled back from its earlier gains and is nearing the 50% retracement level from the decline that started on July 1st. This midpoint is located at 1.16098, just below a key swing range that reaches up to 1.1631. Currently, the currency pair is trading around 1.16219. Traders are eager to see the next possible price movement, particularly whether it can rise above 1.1631.

Potential For Upward Momentum

If buyers can push the price above this level, we could see upward momentum reaching the 61.8% retracement level at 1.16615. This shift would support a bullish trend in the short term. If the price drops below the 50% retracement level, attention will likely shift to the 100-hour moving average at 1.1589. Further declines may bring the focus to the 200-hour moving average at 1.15487, which served as a solid base before the recent price increase. The EURUSD is retreating from its latest rally and is now testing a key support level around 1.1610. This price represents the midpoint of the drop we observed from the high on July 1, 2025. We are monitoring closely to see if buyers can maintain this level against current selling pressure. If the price remains above the 1.1610 midpoint, traders may see it as an opportunity to buy. Short-term call options aimed at the 1.1660 resistance level could be a good strategy in the coming week. This view is supported by the recent Eurozone CPI data for July, which showed a cooler-than-expected inflation rate at 2.1%, relieving pressure on the ECB for aggressive hikes.

Signs Of Bearish Momentum

However, if we see a strong break below 1.1610, it would indicate that buyers have lost control, and momentum is shifting. In such a case, we would consider put options with an initial target at the rising 100-hour moving average around 1.1590. This bearish outlook is further backed by last Friday’s robust U.S. non-farm payroll report, which revealed 250,000 jobs added in July, strengthening the dollar. We’ve seen similar indecision before, especially during the central bank policy changes of 2024, which caused sharp market swings. With mixed signals from both the U.S. Federal Reserve and the European Central Bank, implied volatility on options may rise as we approach the September policy meetings. Traders should prepare for potentially quicker and larger price movements in the upcoming weeks. If selling persists past the 1.1590 level, we would then look toward the 200-hour moving average at 1.1549. This level was key in launching the rally we saw just yesterday, making it an important support zone. A test of this area would indicate a more serious downturn for the currency pair. Create your live VT Markets account and start trading now.

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