EUR/USD inched higher on Friday as the US Dollar softened after traders pared back Federal Reserve rate-hike expectations following a weak US Nonfarm Payrolls report. The pair was trading around 1.1562, close to a seven-week high, but price action has stayed range-bound for more than a week. The 100-day Simple Moving Average has capped rallies since the pair rebounded from below 1.1400 in late July, leaving the market focused on whether buyers can push through that ceiling.
Near-term tone remains bullish, supported by a dovish repricing of Fed expectations alongside optimism over peace in the Middle East and the reopening of the Strait of Hormuz, factors that could keep the US Dollar on the back foot. The next catalyst is US Consumer Price Index data due next week. On the chart, the 50-day SMA at 1.1471 is the first support, ahead of 1.1400, while the RSI at 63 and a positive MACD point to positive momentum. Resistance sits at the 100-day SMA at 1.1568 and then the 200-day SMA at 1.1629, with 1.1700 and 1.1800 beyond.
Options Strategies for a Potential Breakout
As we monitor the EUR/USD trading near 1.1562 today on August 7, 2026, derivative traders should prepare for a breakout above the 100-day SMA at 1.1568. We suggest buying short-term EUR call options expiring in two to three weeks to capture the upside ahead of next week’s US CPI data. This bullish bias is supported by recent CFTC positioning data showing that speculative net-long Euro contracts have surged by over 14% this month.
Historical Patterns and Risk Management
Looking at historical patterns, a clean break above the 100-day SMA with an RSI of 63 often triggers a swift 1.5% rally toward the 200-day SMA, currently at 1.1629. For example, during a similar technical breakout in late 2023, the currency pair jumped 220 pips in just two weeks once key resistance gave way. To maximize returns while managing premium costs, we can utilize bull call spreads targeting the 1.1700 and 1.1800 levels.
However, we must remain cautious of downside risks and place protective put options or stop-losses slightly below the 50-day SMA support of 1.1471. If next week’s inflation data surprises to the upside, the US Dollar could quickly reclaim lost ground and push the pair down. Maintaining these hedges will safeguard our portfolios in case the market suddenly retreats to the 1.1400 psychological floor.
