EUR/USD rebounded sharply after sliding to 1.1577 last Friday, turning higher from 1.1573 and reaching 1.1620. The move followed a drop that had taken the pair close to support around 1.1570, while 1.1550 remains the major support in view. Despite the bounce, momentum has yet to show a clear pick-up, leaving the Euro expected to trade within an intraday range of 1.1595 to 1.1640.
Over a one-to-three week horizon, the pair had been framed as range-bound between 1.1600 and 1.1685 when spot was 1.1650 on 28 Aug, before it later slipped below 1.1600. As of 31 Aug, spot was 1.1585 and downside risks were still geared towards 1.1550, although oversold short-term conditions suggest that level may not be approached immediately. Downward momentum has since eased, but only a break above 1.1650—still marked as strong resistance—would reduce the likelihood of 1.1550 coming back into view. Longer-term levels referenced remain 1.1800 and 1.1850.
Intraday and Near-Term Trading Strategies
We see the Euro stabilizing after a sharp selloff to 1.1573, meaning derivative traders should focus on range-bound strategies today. Since the intraday movement is expected to stay tight between 1.1595 and 1.1640, selling short-term options like iron condors could be highly profitable. This consolidation comes as recent Eurozone inflation steadying at 2.2% gives the European Central Bank room to pause its rapid policy changes.
Over the next one to three weeks, we believe downside risks pointing toward the major support level at 1.1550 will persist. Traders can capitalize on this by buying put options with a 1.1550 strike price, while keeping a strict exit if the Euro breaks past the 1.1650 resistance mark. Historically, the 1.1500–1.1550 zone has acted as a powerful technical floor during major currency corrections, meaning a sudden reversal is highly possible.
Longer-Term Outlook and Strategic Positioning
Looking further out, our longer-term targets remain bullish at 1.1800 and 1.1850 as global macroeconomic pressures shift. With the Federal Reserve projected to continue trimming interest rates from their peak, the US dollar’s dominance is expected to gradually fade. Accumulating long-dated call options during these weekly dips offers an excellent risk-to-reward setup for patient traders.
