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    UOB Group analysts expect the euro to stabilize between 1.1690 and 1.1770.

    by VT Markets
    /
    Jan 21, 2026
    The EUR/USD currency pair is expected to stabilize around 1.1690 to 1.1770 in the near term. Recently, the Euro rose to 1.1768 before settling at 1.1724, marking its biggest one-day gain in over four months at 0.68%. Looking ahead, the Euro began the week slowly but later picked up momentum, potentially continuing that trend. However, it seems unlikely to break through the strong resistance at 1.1805 right now. The risk is skewed to the upside as long as the Euro stays above the solid support level of 1.1560.

    Expectations in Late 2025

    In late 2025, we noticed a strong rally in the Euro, leading to expectations for consolidation between 1.1690 and 1.1770. Although there was an overall upside risk, breaking above 1.1805 seemed unlikely then. The key was watching the strong support at 1.1560 to keep the bullish outlook. Since then, the situation has shifted. The Eurozone’s December 2025 inflation report dropped to 1.9%, below expectations, which reinforced a dovish stance from the European Central Bank. Meanwhile, the latest US jobs report for December showed robust wage growth at a 4.2% annual rate, putting pressure on the Federal Reserve. This economic disparity has pushed EUR/USD below that critical 1.1560 support level we identified last year. In light of this change, traders should think about strategies for a possible move lower. Buying March put options with a strike price around 1.1400 would provide downside protection and profit from further declines. For a more cautious approach, a bearish put spread—buying a 1.1400 put and selling a 1.1250 put—would limit initial costs while defining risk.

    Evaluating Volatility Trends

    Implied volatility in EUR/USD has also increased, now sitting at 7.8% for one month, compared to an average of 6.5% in the fourth quarter of 2025. This makes selling options more appealing for collecting premium, although it involves higher risk. Selling out-of-the-money call options with a strike price above the former 1.1770 resistance level could be a good strategy for those who think any rally will be limited. Create your live VT Markets account and start trading now.

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