EUR/USD hovered near 1.1530 in Friday’s US session, consolidating after rebounding from intraday lows as firmer Eurozone inflation lent the euro support, while the US dollar drew backing from hawkish Federal Reserve messaging. Eurostat’s preliminary figures showed July HICP at 2.9% year on year, up from 2.8% in June, and core HICP at 2.5% versus 2.4% previously; month on month, headline HICP rose 0.2% and the core measure was flat. In Germany, the unemployment rate ticked up to 6.4% from 6.3%, and the number of unemployed increased by 6,000.
On the charts, EUR/USD was at 1.1531 on a four-hour view, staying above the 20-period and 100-period SMAs, with the shorter average above the longer and rising. RSI sat around 67, consistent with overbought conditions. Initial support was marked at 1.1526, with 1.1518 and 1.1513 close by; further down, 1.1485 was in view, ahead of the 20-period SMA near 1.1457 and the 100-period SMA around 1.1423.
ECB Policy Outlook and Trading Opportunities
As we enter August 2026, resilient Eurozone inflation data suggests the European Central Bank will keep interest rates steady, providing a solid floor for the currency. With headline HICP rising to 2.9% and core inflation ticking up to 2.5% in July, we believe the EUR/USD’s upward momentum remains fundamentally supported. Derivative traders should look to capitalize on this underlying strength by preparing for bullish positions on minor pullbacks in the coming weeks.
Given that the RSI is currently hovering near overbought territory at 67, we recommend using bull put spreads to capture premium while defining our downside risk. Selling put options around the 1.1450 level allows us to benefit from the pair’s constructive trend without buying directly at local peaks. Historical analysis of similar currency consolidations shows that buying volume typically resurges when the price approaches the 100-period moving average.
Risk Management Amid Federal Reserve Uncertainty
However, we must remain alert to the Federal Reserve’s hawkish stance, especially with policymakers warning that US inflation is not yet on track for its 2% target. To hedge against sudden US Dollar surges, traders should consider buying cheap, out-of-the-money EUR/USD put options near 1.1350. This dual-strategy approach ensures we remain profitable during steady climbs while staying protected against unexpected macroeconomic shocks.
