The Euro (EUR) must drop and close below 1.1615 for a move toward 1.1585, say the FX analysts at UOB Group. Last Thursday, many expected the Euro to test 1.1650. It fell to 1.1642, and there were hopes of it reaching 1.1635 before bouncing back. At that time, hitting the support level of 1.1615 seemed unlikely. However, the Euro did dip to a low of 1.1617, but it showed no signs of recovery. It’s now expected to trade between 1.1615 and 1.1665. For the next one to three weeks, the outlook for the Euro has been negative since early last week. Last Friday, it was noted that the Euro’s downward momentum had increased, and a break below 1.1615 wouldn’t be surprising. Still, a close below this level is necessary to move toward 1.1585. As long as it stays below the strong resistance at 1.1690, the possibility of closing under 1.1615 remains. We recall a similar situation in January 2025, where a close below 1.1615 indicated potential further losses for the Euro. At that time, 1.1690 acted as strong resistance, holding firm and resulting in a significant drop over the following year. This past scenario helps shape our current approach. Today’s circumstances are quite different. The EUR/USD is trading much lower, around 1.0750. This long-term weakness is backed by recent economic data, showing Eurozone inflation at 2.3% in December 2025, while US inflation is at 2.9%. This suggests that the European Central Bank might cut interest rates before the US Federal Reserve. For traders, this indicates a continued favor for bearish positions on the Euro. Purchasing EUR/USD put options with a strike price near 1.0700 might be a smart way to prepare for a potential drop. This strategy defines risk while allowing for profits if the currency pair continues to decline. Currently, the one-month implied volatility for EUR/USD is around 6.8%, which is below the three-year average of about 8.5%. Lower volatility makes options cheaper, presenting a cost-effective chance to gain short exposure. If economic data surprises, volatility could spike, increasing the value of long put positions. The main risk to this bearish outlook is if the Euro consistently moves above the recent high of 1.0820. We see this as a new “strong resistance” level for the upcoming weeks. A clear break above this point would indicate that downward momentum is weakening and would require a reevaluation of strategies leaning toward short positions.

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