The EUR/USD pair is positioned near its nine-day EMA barrier, trading around 1.1640. The 14-day Relative Strength Index, at 44, suggests diminishing momentum, with immediate resistance at the nine-day EMA of 1.1645.
EUR/USD shows limited movement after minor gains from the previous session. Technically, the pair stays below both the nine-day and 50-day EMA, maintaining a bearish outlook, with short-term averages below medium-term ones, which further indicates downward pressure.
Potential Support Levels
A fall below the nine-day and 50-day EMAs may see EUR/USD test the seven-week low at 1.1589, potentially leading to support around 1.1468. However, a breakout above the nine-day EMA at 1.1645 could alleviate pressure, moving toward the 50-day EMA at 1.1670.
Should buyers regain control above the medium-term average, the EUR/USD pair could potentially rally toward the three-month high of 1.1808, last seen on December 24, followed by 1.1918, the peak since June 2021. In currency movements, today, the Euro saw a slight gain against the US Dollar, British Pound, and Japanese Yen, with mixed performance against other major currencies, confirming its strongest position against the British Pound.
We are seeing the EUR/USD pair struggle near the 1.1645 resistance level, with indicators like the RSI at 44 suggesting momentum is fading. This technical setup points towards a potential downward move in the coming weeks. For traders, this could mean looking at positions that benefit from a falling Euro.
The key level to watch is the low from early December 2025, around 1.1589. A decisive break below this support could trigger further selling, opening a path toward the 1.1468 area. This scenario makes buying put options with a strike price around 1.1550 or 1.1500 an attractive strategy for the next few weeks.
Fundamental and Technical Influences
This technical weakness is supported by recent fundamental data. Last week’s Eurozone flash PMI figures came in at a disappointing 48.2, signaling contraction, while the latest US non-farm payroll report added a robust 210,000 jobs, reinforcing the Federal Reserve’s hawkish stance. This divergence between the ECB’s dovish tone and the Fed’s data-driven approach continues to favor the US dollar.
However, we must remain cautious of a potential short squeeze if the pair reclaims the 1.1670 level, which is the 50-day moving average. A sustained move above this point would neutralize the immediate bearish outlook and could signal a shift in momentum. Traders might consider buying short-dated call options with a strike above 1.1700 as a low-cost way to position for such a reversal.
This situation feels familiar, reminding us of the trend seen throughout 2022 when aggressive Federal Reserve rate hikes widened the policy gap with the European Central Bank. During that period, the EUR/USD fell significantly, breaking below parity for the first time in two decades. While we don’t expect such a dramatic move now, the historical precedent supports a strategy that favors dollar strength against the euro.
