EURUSD has dropped to new session lows, going below the previous resistance level from August, which was between 1.1730 and 1.17419. The pair’s failure to stay above this level has energized sellers. They now need to drive the price under the 100-hour moving average at 1.17009, which is currently rising. If the price falls below the 200-hour moving average at 1.1688, it will strengthen the bearish sentiment. Last Friday, the pair surged past these averages due to a weaker-than-expected U.S. jobs report, with the averages then closer to 1.1661. Now that these levels are higher, sellers face a tougher challenge to gain full downward momentum.

Buyers and Sellers Struggle for Control

For buyers to regain full control, they need to push the pair back above 1.17419. They briefly rose above the August highs and even reached higher today, but they couldn’t maintain that momentum. This failure is increasing seller confidence, causing concern for buyers as both sides fight for control. Sellers are gaining confidence as the EURUSD struggles to hold above the key resistance at 1.17419, which reflects the August highs. This inability to stay above this level is concerning for buyers. The immediate battleground has now shifted toward the 100-hour moving average around 1.1700. The surge last Friday was a direct response to the disappointing U.S. jobs report for August, which showed only 95,000 jobs were added, compared to the expected 180,000. This report initially weakened the dollar, but the market’s inability to continue that trend suggests deeper conflicts are occurring. The current focus is on whether sellers can push the price below key moving averages to confirm their control. This price action takes place alongside recent Eurozone inflation data, which came in slightly higher than expected at 2.3% for August, creating a confusing scenario for traders. With mixed signals from the Federal Reserve and ECB, the market is caught between conflicting economic indicators. This uncertainty indicates that a significant breakout may be on the horizon as pressure builds.

Strategies for Navigating Market Uncertainty

In the coming weeks, traders are positioning for increased volatility rather than a clear direction. Buying short-dated option straddles around the current price allows traders to profit from significant moves, whether the price breaks above 1.17419 or below 1.1688. This strategy works well when the market is tightly coiled, as it is now. Those with a bearish outlook should think about buying put options with strike prices below the 200-hour moving average at 1.1688. This provides a clear, risk-defined way to play a potential breakdown if sellers gain control. A break below that level could lead to a quick drop, making puts an efficient choice. On the other hand, anyone who believes the dollar’s weakness from last Friday will continue can look at call options with a strike just above the 1.17419 resistance. A sustained move past that level could trap sellers and cause a rapid rise. These options allow for a leveraged bet on buyers regaining full control. We recall a similar period of uncertainty in the spring of 2024, where a failed breakout led to several weeks of choppy, range-bound trading. This teaches us that waiting for a confirmed break of the current range, between 1.1688 and 1.17419, is the wisest approach. Acting before that confirmation carries significant risk. Create your live VT Markets account and start trading now.

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