Current Technical Outlook
The EUR/USD has recently retested and bounced back near an old resistance level, which is now support. The next major psychological resistance is at the 1.2000 mark. If the price closes above this level, it could signal a bullish breakout.
As long as EUR/USD stays above key moving averages, the risk of a downside movement is limited. The 100-day SMA at 1.1678 acts as strong support. Current indicators show good momentum, with the RSI around 60 and the ADX suggesting a strengthening trend.
The Euro is used in 20 countries and is the second most traded currency worldwide. The European Central Bank (ECB) in Frankfurt impacts the Euro with its monetary policies and interest rate decisions. Economic factors, such as inflation, GDP, PMIs, and trade balance, all affect the Euro’s value.
Currently, the Euro is gaining strength against the Dollar, and the technical outlook suggests further upward movement. The 1.2000 psychological level will be the next major challenge for buyers. The ongoing trend is supported by prices staying above key moving averages.
Strategic Positioning Options
This upward movement is supported by fundamental data. Last week’s US Non-Farm Payrolls report showed only 155,000 jobs were added, weaker than expected, which has weakened the Dollar. Meanwhile, inflation in the Eurozone remains high, with the January HICP estimate at 2.4%, putting pressure on the ECB. These differing economic conditions are driving the pair higher.
For those looking to take advantage of further price increases, buying call options is a straightforward strategy. Consider targeting strike prices at or just above 1.2000 for options set to expire in the coming weeks to catch a potential breakout. This strategy involves defined risk if the price doesn’t rise as expected.
A more cautious strategy is to sell out-of-the-money put options to earn premiums while betting that the pair won’t fall significantly. With strong technical support around the 21-day moving average near 1.1780, this level can be used as a reference for setting strike prices. This approach profiting from rising prices and sideways movement above support.
The current bullish trend marks a clear shift from the sideways actions seen throughout much of the second half of 2025. We should continue this positive outlook as long as the price remains above the 1.1780 to 1.1678 support zone. If it drops below this area, it would signal a failed breakout.
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