EUR/USD eased towards 1.1370 on Friday even as Eurozone surveys strengthened, with the US Dollar Index holding near 101.50. Germany’s flash HCOB Composite PMI rose to 51.2 in July from 49.5, above the 49.8 consensus. Manufacturing improved to 52.2 from 50.3, while services edged up to 49.6 from 48.6, still below the 50.0 expansion line. Across the bloc, the Composite PMI lifted to 51.9 from 50.0, beating the 50.3 forecast; manufacturing printed 52.0 and services rebounded to 51.6 from 49.4.
In the US, S&P Global Manufacturing PMI slipped to 53.8 versus 54.5 expected, but Services PMI jumped to 53.6 from 51.2, well above the 51.0 forecast, a mix that may keep US Treasury yields supported. Reports that Pakistan and Iran are exploring a route to renewed US-Iran talks under a China-backed initiative coincided with a sharp drop in oil prices. Attention turns to the Fed’s 28–29 July meeting, where rates are seen held at 3.50%–3.75% without new projections or a dot plot. On a 4-hour view, EUR/USD traded at 1.1369, below the 20-period SMA at 1.1397 and the 100-period SMA at 1.1422, with the RSI near 37 and support at 1.1368 and 1.1366.
Technical Outlook And Trading Strategies
We suggest derivative traders prepare for continued downward pressure on the EUR/USD pair in the coming weeks, especially as it struggles near the 1.1370 level. Despite surprisingly strong Eurozone business activity figures, the US dollar’s resilience keeps the currency pair locked in a bearish trend. We should look closely at the technical setup, where a break below the immediate support cluster of 1.1366 to 1.1368 could trigger a rapid descent.
To capitalize on this technical breakdown, we recommend buying short-term put options with a strike price just below 1.1360. This strategy allows us to profit from a further drop while limiting our risk ahead of high-impact economic events. Alternatively, traders can use bear put spreads to lower the cost of premium in what remains a highly volatile environment.
Event Risk And Macro Backdrop
The upcoming Federal Reserve meeting on July 28–29 will be the main driver of volatility, with markets expecting rates to hold at 3.50% to 3.75%. Since this meeting will not feature new economic projections, Chair Kevin Warsh’s press conference will heavily influence the US Dollar Index, which is currently holding strong near 101.50. We should monitor his tone closely, as any hints of prolonged higher rates will likely push the Euro even lower.
This bearish view is supported by broader macroeconomic data, as Eurozone inflation has recently stabilized near 2.2%, allowing the European Central Bank more room to ease policy compared to the resilient US economy. Meanwhile, US services activity remains incredibly robust, with the latest Services PMI surging to 53.6, far ahead of the 51.0 forecast. We believe this divergence in economic momentum makes the dollar a much safer bet for option traders right now.
