EUR/USD traded near 1.1775 on Tuesday after rebounding from a one-month low last week. The US Dollar found support after Fed minutes showed officials split on the interest rate outlook.
Markets priced virtually no chance of a rate cut in March and about an 80% probability of a hold in April. Fed Chair Jerome Powell’s term expires in May.
Fed And Ecb Policy Divergence
The ECB was described as effectively on hold with inflation near its 2% target. ECB President Christine Lagarde confirmed she will serve out her full term.
US Consumer Confidence data and several Fed speeches were due on Tuesday. Delayed US jobs and inflation reports later this week were also flagged as near-term drivers.
On the daily chart, EUR/USD was down 0.12% and sat near the 50-day EMA around 1.1775. It has fallen from the January high near 1.2080, a drop of about 300 pips.
The pair remained above the rising 200-day EMA at 1.1585, near the early-January swing low around 1.1580. The Stochastic Oscillator turned lower and neared oversold levels.
Key Support And Resistance Levels
Support was cited at 1.1750 and 1.1700, with 1.1578 next if the decline extends. A move back above 1.1830 would refocus attention on 1.1900 to 1.1950.
A correction note dated February 24 at 16:35 said the move lower occurred on Tuesday, not Monday.
Looking back to this time in 2025, we saw the EUR/USD struggling near 1.1775, weighed down by uncertainty over the Federal Reserve’s path. Today, with the pair trading firmly above 1.2150, that uncertainty has resolved into a clear policy divergence favoring the Euro. The Fed has since begun a slow-moving easing cycle while the European Central Bank remains on hold.
The split Fed sentiment we noted in 2025 eventually gave way to rate cuts as US inflation cooled significantly. Recent data confirms the US Consumer Price Index has fallen to 2.5%, allowing the Fed to continue its dovish policy. This contrasts sharply with the Eurozone, where inflation remains stickier at 2.7%, keeping the ECB from considering any rate reductions.
Given this established upward trend, derivative traders should look to position for further Euro strength. The indecision noted around the moving averages in 2025 has been replaced by sustained momentum, making long call options or bull call spreads attractive strategies. These allow for participation in the upside while defining risk should US economic data suddenly surprise with unexpected strength.
We should also watch the long-term technical picture, which has evolved since last year. The 200-day moving average that provided support near 1.1585 in early 2025 has now risen to act as a floor around the 1.1900 level. This level can be used as a key strike price for selling puts to collect premium or as a trigger point to reconsider bullish positioning.
