EUR\/USD edged higher on Monday after rebounding from 13-month lows near 1.1320, but it failed to sustain a break above 1.1400. Market risk appetite remained fragile as uncertainty persisted over the US-Iran ceasefire and the status of the Strait of Hormuz, after Iran cited talks with Oman and the US Navy raised the threat level in the waterway to \u201csignificantly high\u201d. Attention also turned to central bank and data catalysts, including a speech by ECB President Christine Lagarde in Sintra, Portugal, alongside upcoming US inflation and employment releases that could shape expectations for Federal Reserve policy.<\/p>\n
Technically, the pair was described as in a corrective rebound while the broader bearish trend holds, with RSI (14) recovering to the mid-50s and MACD moving into positive territory. Price action stayed capped below former support around 1.1430, which keeps resistance in focus near 1.1500 and then in the 1.1620\u20131.1660 band. On the downside, initial support is seen at 1.1320, and a deeper fall could reopen the late-May 2025 low at 0.1210.<\/p>\n
Given the current date of June 29, 2026, we see the recent bounce in EUR\/USD as a corrective move within a larger downtrend, not a reversal. The geopolitical uncertainty in the Strait of Hormuz creates a risk-off environment that typically strengthens the US dollar. We are therefore positioning for potential renewed weakness in the Euro over the coming weeks.<\/p>\n
We have observed that one-month implied volatility in EUR\/USD has risen to 6.8% in the past week, reflecting market anxiety over both the fragile ceasefire and the upcoming US economic data. Historically, similar periods of geopolitical stress, such as the tensions in 2019, have led to spikes in volatility and a flight to the safety of the dollar. This makes options strategies particularly attractive for managing risk.<\/p>\n
With this in mind, we are looking at buying put options with a strike price below the 1.1320 support level, targeting a move towards the late May 2025 lows around 1.1210. This approach provides a defined risk on a trade that benefits from a drop in the EUR\/USD exchange rate. The upcoming US employment figures will be a critical catalyst for this move.<\/p>\n
For traders less convinced of a sharp drop, a bear call spread could be an effective strategy to collect premium. We would consider selling a call option with a strike near the 1.1500 resistance level while buying a cheaper call at a higher strike to cap the risk. This position benefits from the pair staying below 1.1500, which aligns with recent US data showing non-farm payrolls have consistently beaten expectations for the last three quarters, suggesting continued economic strength that favors the Fed.<\/p>\n\n\n\n