The Evolving EURUSD Momentum
The EURUSD has risen, achieving a new session high and surpassing the July 1 peak of 1.18289 for the year. This advancement marks the pair’s highest level since September 2021, showcasing a strong upward momentum.
On the daily chart, the breakthrough paves the way towards a key resistance zone around 1.1909. This area includes former swing highs, specifically 1.1909 on September 3, 2021, and 1.19087 on July 30, 2021. The proximity of these levels suggests traders will likely assess this region for future price movements.
Should the upward momentum persist, breaking clearly through 1.1909 could lead to further retracement targets, continuing the positive trend observed as the pair progressed through previous resistance levels this month. Conversely, support is solidifying at the 1.18289 breakout level, where buyers are anticipated to support the market during potential declines. Additional support is noted at 1.1788, the high from July 24.
Opportunities in Options
Given the strong upward momentum that pushed us past the July 2025 peak, we see an opportunity in buying call options. A move toward the next key resistance area around 1.1909 seems increasingly likely in the coming weeks. This level is significant because it marks the highs from back in the summer of 2021.
This technical strength is supported by fundamentals, with the latest German ZEW Economic Sentiment for September beating expectations at 15.2. Furthermore, recent comments from the ECB suggest a growing bias toward tightening monetary policy to combat inflation, which was last reported at 2.8% for the Eurozone. This divergence from the Federal Reserve’s more cautious stance is fueling the Euro’s rise.
For those with a slightly more conservative view, selling out-of-the-money put options with a strike price near the new support level of 1.18289 could be a prudent strategy. This approach allows traders to collect premium while betting that the former resistance will hold during any potential pullbacks. Implied volatility has ticked up slightly on this breakout, making these premiums more attractive.
The US Dollar Perspective
We are also watching the dollar side of the equation, where last month’s US jobs report came in softer than anticipated, showing a gain of only 150,000 jobs. This data, combined with a more cautious tone from last week’s Federal Reserve minutes, suggests the dollar may continue to weaken against the euro. The policy divergence between the central banks is becoming the market’s primary driver.
