The Euro (EUR) is facing some downward pressure and may test the 1.1600 level, but analysts do not expect it to drop below that point. They anticipate that EUR will trade between 1.1580 and 1.1685 for the longer term, as the rise seen last month has ended. In the past 24 hours, the EUR closed 0.09% lower at 1.1625, moving within a more limited range than expected. Even with a slight increase in downward force, a drop below 1.1600 or the strong support at 1.1580 is unlikely. The resistance level is at 1.1640, and if it breaks 1.1660, this could suggest a reduction in the mild downward trend. Looking ahead to the next 1-3 weeks, the outlook for EUR has shifted. The upward momentum has slowed, especially after EUR hit 1.1615 recently. Although the strong support level remains intact, the decreased momentum indicates that EUR is likely to move within the range of 1.1580 to 1.1685, rather than continuing to rise. It appears that the Euro’s recent surge has lost momentum. Over the coming weeks, instead of expecting a significant breakout, we should prepare for it to trade sideways. The crucial range to monitor is from 1.1580 on the low end to 1.1685 on the high end. This perspective is backed by recent communications from central banks. Last week, the European Central Bank kept rates steady and indicated a “wait-and-see” approach after Eurostat’s latest flash estimate showed that November inflation eased slightly to 2.1%. This reduces the urgency for a more aggressive policy that would boost the Euro. On the other hand, recent U.S. data does not indicate a strong dollar either. The latest Non-Farm Payrolls report from last Friday showed an increase of 185,000 jobs—healthy, but not strong enough to push the Federal Reserve towards a more aggressive stance. This balanced situation between the two economies helps maintain the currency pair within a defined range. Given the expected lower volatility, selling options could be a wise strategy. We might consider setting up iron condors or short straddles with strikes beyond the expected 1.1580-1.1685 range to collect premiums as the currency pair moves sideways into year-end. The Cboe EuroCurrency Volatility Index has been hovering near its yearly lows, indicating that the market believes significant movements are unlikely. However, we need to stay cautious, as low-volatility periods can end suddenly, just like the sharp market shifts seen in 2023. A break below the 1.1580 support or above the 1.1685 resistance would signal that this range-bound outlook is no longer valid. Therefore, strict stop-losses on any range-based positions are essential to manage risk.

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