EUR/USD fell further in the Asian session on Tuesday after pulling back from the 1.1835 area. It traded around 1.1775–1.1770, down nearly 0.15%, alongside modest US dollar strength.
Traders are watching for a sustained move below the 61.7% Fibonacci retracement level after the recent rebound from the 200-day simple moving average (SMA) support, tested in January. A break under last week’s low at 1.1745–1.1740 could extend the corrective move from about 1.2100, the highest since June 2021, reached last month.
Technical Indicators Signal Mild Bearish Momentum
The MACD histogram has pushed further into negative territory, with the MACD line below the signal line near zero. The RSI is at 46, below the 50 midpoint, pointing to mild bearish momentum without being oversold.
Further downside support is seen near the 78.6% retracement level around 1.1695. The 200-day SMA is rising modestly and sits at 1.1658, with the pair still trading above it.
Part of the technical analysis was produced with the help of an AI tool.
We recall observing similar bearish pressure building on EUR/USD back in 2025 when the pair was trading near 1.1775. The negative MACD and a sub-50 RSI at that time correctly signaled a developing weakness. That corrective slide did eventually continue, breaking below the key moving average supports we were monitoring throughout that year.
Current Macro Backdrop Favors The Dollar
Today, the environment has shifted, with the pair trading much lower near 1.0750 amid persistent US Dollar strength. This is largely driven by the wide interest rate differential, with the US Federal Reserve’s key rate holding at 4.75% while the European Central Bank’s is at 3.5%. That 1.25 percentage point gap continues to make holding dollar-denominated assets more attractive.
Given this fundamental backdrop, derivative traders should consider buying EUR/USD put options to speculate on further downside in the coming weeks. Recent data showing Eurozone inflation moderating to 2.8% gives the ECB less urgency to maintain a hawkish stance, potentially weighing on the euro. Puts with a strike price around 1.0650 would offer a defined-risk strategy to target the lows seen late last year.
However, we must also consider potential volatility from upcoming US non-farm payrolls data. A weaker-than-expected jobs number could temporarily soften the dollar and trigger a short-term rally. Traders could use out-of-the-money call options with a strike above 1.0900 as a low-cost hedge against any such unexpected upward correction.
