The EURUSD currency pair has hit a new low for the day while staying in a tight trading range. This range is currently 47 pips, much lower than the usual average of 88 pips. Technically, the pair is moving away from a swing area between 1.1692 and 1.17028. This move takes away nearby support for buyers and strengthens sellers’ positions. Now, the focus is on several targets at lower levels: the 200-hour moving average at 1.16674, the 61.8% retracement level at 1.16615, and the 100-hour moving average at 1.16522.

Important Support Zone

These levels create a key support zone. If the price drops below this area, it could reverse the upward momentum seen on Friday, impacting buyers who entered above these levels previously. The EURUSD is dropping to new lows, but the market remains calm, with a daily range well below the recent average. Sellers are growing more confident as the price moves away from the 1.1700 swing area. Right now, the focus is on the crucial support zone between the 200-hour moving average at 1.1667 and the 100-hour moving average at 1.1652. This technical pressure is backed by recent data showing that Eurozone CPI for July 2025 was below target at 1.9%. This has raised expectations that the European Central Bank will adopt a dovish stance, especially with officials scheduled to speak at the upcoming Jackson Hole symposium. Any indication of future easing could push the pair below that support cluster.

Policy Divergence

On the other hand, the dollar is buoyed by a strong labor market, with the July 2025 Non-Farm Payrolls report adding over 250,000 jobs, surpassing expectations. Recent Federal Reserve minutes indicate a continued hawkish outlook, keeping the option for another rate hike in 2025 open. This difference in policy is putting pressure on the euro. The tight trading range suggests low volatility, making options strategies appealing. Given the downside risks, traders might consider buying puts or setting up bear put spreads to aim for a drop below 1.1650. This approach offers a defined-risk opportunity to profit from a potential breakdown if both the fundamental and technical conditions align. We have seen similar setups before, where the policy divergence between a hawkish Fed and a cautious ECB led to significant dollar strength in 2022. A clear break below the 100-hour moving average would indicate that Friday’s rally was a false start and confirm a lower path for the pair. Create your live VT Markets account and start trading now.

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