The EUR/USD exchange rate has stopped falling after seven days, currently trading around 1.1676, marking a 0.36% increase as the US Dollar faces selling pressure. This decline follows subpoenas issued by the US Department of Justice against Federal Reserve Chair Jerome Powell related to a renovation project. Concerns about the independence of the Federal Reserve are impacting the US Dollar’s strength and causing fluctuations in other major currencies. Technical indicators show that EUR/USD is stabilizing but lacks strong upward momentum, especially at the key psychological level of 1.1700.

Breaking Above Key Levels

If the pair breaks above 1.1700, it could rise towards 1.1730 and potentially reach 1.1800. However, if it falls below 1.1650, we may see attention shift back to supports at 1.1600 and 1.1550. Momentum indicators indicate uncertainty in the currency pair’s direction. The Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) suggest limited movement potential, with the RSI hovering around 47. The Euro is the official currency of 20 countries in the European Union, making up the Eurozone. It represents 31% of all foreign exchange transactions, second only to the US Dollar, with the EUR/USD pair being the most traded globally. The European Central Bank is responsible for monetary policy in this region. Currently, the EUR/USD shows early signs of stabilization, but bearish momentum persists. This situation recalls events in 2025 when the pair ended a seven-day losing streak due to political pressure on the Federal Reserve, weakening the dollar. This highlights how quickly market sentiment can shift based on non-economic news. As of January 12, 2026, market drivers focus more on economic data than political surprises. Recent figures indicate Eurozone inflation remains at a challenging 2.8%, while the latest US CPI data stands at 3.1%, keeping pressure on central banks. This slight difference sparks debate over which bank, the ECB or the Fed, might cut interest rates first this year.

Key Technical Levels

The key levels from last year, like the 1.1700 resistance, are currently out of reach as the pair trades at lower levels. Now, the critical cap on recovery attempts is at 1.0950, with solid support near 1.0780. The diminishing momentum seen in indicators like the MACD suggests the market waits for a new catalyst before making a decisive move. For traders looking ahead, the current uncertainty and defined ranges make options strategies appealing. Selling out-of-the-money puts and calls through an iron condor could generate profits if the pair stays within its support and resistance levels. This strategy benefits from sideways movement and the passing of time. Conversely, the quick volatility spike from 2025 serves as a cautionary tale. Traders anticipating a breakout from the current narrow range, possibly after the upcoming ECB meeting, might consider buying straddles. This allows them to profit from significant price swings in either direction without needing to predict specific policy outcomes. There has also been a noticeable change in market positioning, as per the latest CFTC report. Net-long positions on the Euro have decreased by nearly 15,000 contracts in the past month, marking the largest drop since the third quarter of 2025. This suggests that large speculators are pulling back on bullish bets, adding a layer of caution for immediate upward movement. Create your live VT Markets account and start trading now.

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