The Euro is weakening against the US Dollar. Positive data from the US supports the strength of the Dollar. The markets expect the Federal Reserve to keep interest rates steady, which further boosts the Dollar. EUR/USD is trading flat around 1.1600, after reaching its lowest point since November 28. Technical indicators are showing bearish pressure on EUR/USD. The pair is trading below important moving averages between 1.1660 and 1.1665. The Moving Average Convergence Divergence (MACD) is still in negative territory, and the Relative Strength Index (RSI) is around 34.

Immediate Support and Resistance

Immediate support is in the 1.1585-1.1600 range. If it drops below this, it could fall to 1.1550. Resistance for any rebounds is near 1.1660-1.1700. The Euro is used by 20 EU countries and is widely traded. In 2022, it represented 31% of foreign exchange transactions. The European Central Bank (ECB), based in Frankfurt, sets interest rates to manage the economy, often changing them in response to inflation. Economic factors like GDP and trade balances affect the Euro’s value. A strong economy can increase the Euro’s strength by attracting foreign investment and possibly leading to higher interest rates. A favorable net trade balance also helps. Currently, we see a pattern where the strength of the US Dollar limits any gains by the Euro. The latest US jobs report shows that 250,000 jobs were added in December 2025, suggesting that the Federal Reserve may not cut rates soon. This situation is similar to the pressure we saw throughout most of last year, when strong US data kept the Dollar high.

Technical Outlook and Trading Strategies

This difference in policy between the US and the Eurozone is becoming clearer. Recent January 2026 inflation data from the Eurozone showed a rate of 1.8%, which is below the ECB’s target. This weak reading raises the chances that the ECB may need to ease its policy later this year, putting more pressure on the EUR/USD pair. Historically, when the Fed keeps rates steady while the ECB hints at cuts, the Dollar typically outperforms the Euro. The technical outlook also supports a bearish view. EUR/USD is struggling below key simple moving averages around 1.1660-1.1700, which served as a major resistance area in 2025. Momentum indicators like MACD and RSI show consistent selling pressure, similar to past downturns. For derivative traders, this environment suggests positioning for further weakness in the coming weeks. Buying put options below the 1.1600 support level could be an effective way to benefit from a continued drop toward the 1.1500 mark. A bear put spread might also help lower the upfront cost while defining risk. Any unexpected rallies should be viewed with caution and seen as chances to enter bearish positions at better prices. We should monitor for oversold conditions, as an RSI near 34 has previously indicated temporary bounces, but the overall trend remains downward. The strong resistance around 1.1700 makes selling call options or using bear call spreads a sound strategy to generate income, with the expectation that the upside is limited. Create your live VT Markets account and start trading now.

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