EUR\/USD rebounded from the 1.1730\u20131.1725 area, a one-week low set in Asia, and has filled much of Monday\u2019s earlier gap. It is trading just above the mid-1.1700s after easing from the 1.1850 area, a two-month peak.<\/p>\n
The US Dollar has struggled to extend gains as expectations for a US Federal Reserve rate rise have weakened. Geopolitical risk linked to the US-Iran dispute over the Strait of Hormuz remains a factor that could support the Dollar and limit EUR\/USD rises.<\/p>\n
Technically, the pair is holding above the 23.6% Fibonacci retracement of the rise from the late-March low, but it remains below the 100-hour EMA. Momentum measures show RSI near 43 and MACD slightly below zero, pointing to sideways trade with a mild downside lean.<\/p>\n
Support levels include 1.1754 (23.6%), then 1.1695 (38.2%) and 1.1648 (50%) if declines continue. Resistance is near the 100-hour EMA at 1.1770, with a break higher exposing 1.1849.<\/p>\n
The report notes the analysis was produced with help from an AI tool.<\/p>\n
Looking back at the analysis from mid-2025, we were watching EUR\/USD struggle around the 1.1750 level. At the time, the market was pricing out Federal Reserve rate hikes, but geopolitical risks in the Strait of Hormuz kept a floor under the dollar. This created a consolidative environment where the pair was capped by its 100-hour moving average.<\/p>\n
Today, the situation has evolved significantly, with the pair now trading near 1.1280. The interest rate divergence we only speculated about in 2025 became a reality, as the Fed enacted two further quarter-point hikes in late 2025 while the European Central Bank held steady. This is supported by recent data showing US core inflation holding at 2.8% year-over-year, while the latest Eurozone HICP figure has softened to just 2.1%.<\/p>\n
For the coming weeks, this divergence suggests strategies that favor a stronger dollar or a range-bound to weaker euro. With implied volatility in EUR\/USD options having risen to an 8-month high of 9.2%, buying puts to hedge against a drop below 1.1200 could be a prudent move. Selling out-of-the-money call spreads with a strike above 1.1400 might also be attractive to collect premium, capitalizing on the strong technical resistance now established at that level.<\/p>\n
Traders should also be mindful of the upcoming US Non-Farm Payrolls report, which will be critical for the Fed’s future path. The market’s reaction to the 2025 US-Iran standoff taught us how quickly safe-haven flows can dominate fundamentals. Any unexpected escalation in current global trade discussions could cause a similar flight to the dollar, making long-dated protective puts more valuable.<\/p>\n
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