The Euro has dropped 0.1% against the US Dollar. It is currently weaker than most G10 currencies, only outperforming the British Pound and Swiss Franc. Comments from the European Central Bank (ECB) have suggested a cautious approach, limiting the Euro’s chances to increase. This has led short-term interest rate markets to expect small interest rate cuts.

Euro Price Activity and Trends

Recent trading shows resistance for the Euro near 1.1750, and the Relative Strength Index (RSI) points to a bullish trend. The Euro is likely to trade between a support level of 1.1680 and a resistance level of 1.1780 for now. FXStreet offers insights from industry experts but reminds readers that this is not investment advice. They highlight the need for thorough research before making any investment choices. Their website includes legal disclaimers about possible risks and inaccuracies in their information. They do not take responsibility for any damages that may arise from their content. The Euro is currently facing challenges against G10 currencies, similar to trends from last year. The ECB’s cautious stance continues to limit any significant upside for the currency. This was reinforced by recent Eurostat data showing that inflation in December 2025 dropped to 2.5%, justifying the ECB’s careful approach to growth.

Interest Rates and Market Positioning

Short-term interest rates are now anticipating at least one 25-basis-point cut by the third quarter, reflecting a clearer shift than the cautious optimism seen a few weeks ago. The gap between German and US 10-year yields has widened to over 150 basis points in favor of the dollar. This makes long-EUR positions more costly for traders due to the negative carry. Recent data from the Commodity Futures Trading Commission (CFTC) indicates a bearish shift, showing a notable decrease in net long Euro contracts held by large speculators as of January 13th. The options market reflects this trend, with put prices rising compared to call prices. This suggests considering strategies to protect against or benefit from a decline in the EUR/USD pair. Looking back at the resistance seen near the 1.1800 mark in late 2025, any future rallies toward that level may present selling opportunities. A fall below the recent support at 1.1650 could push the Euro even lower. Thus, buying puts or creating bearish put spreads with strike prices below 1.1650 could be wise for the upcoming weeks. Create your live VT Markets account and start trading now.

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