EUR/USD rose more than 0.32% on Friday, recovering from an intraday low of 1.1526 to trade near 1.1564 and test the 100-day SMA at 1.1567, with the 1.1600 psychological level nearby. The broader technical picture still points to a downtrend, as the pattern of lower highs and lower lows has held, yet the pair’s reclaiming of the 1.1500 area since July 30 has increased the risk of a bullish reversal. RSI readings are described as supportive of improving upside momentum.
On a break higher, attention turns to the 200-day SMA at 1.1629, which would open the way to the May 29 high at 1.1685 and then 1.1700. Beyond that, the April 17 high at 1.1849 would come into focus ahead of the 1.1900 area. If the pair slips back under 1.1500, the 50-day SMA at 1.1465 becomes the next downside marker, with 1.1400 identified as a further demand zone.
Derivative And Options Trading Considerations
We advise derivative traders to position themselves carefully as EUR/USD challenges the crucial 100-day Simple Moving Average at 1.1567. Since the pair has reclaimed the 1.1500 level, we see an increasing risk of a bullish reversal. This upward momentum is backed by recent Eurozone economic data, where core inflation printed at a stubborn 2.4% last month, keeping pressure on the European Central Bank to hold rates steady.
For options traders, we recommend looking at short-term call options if the pair secures a daily close above the 100-day SMA. A clean breakout past 1.1567 opens the door to the 200-day SMA at 1.1629, with further targets at 1.1685 and 1.1700. Historical data from similar technical setups over the last decade shows that reclaiming the 100-day SMA with a rising RSI leads to a continuation rally 65% of the time.
Risk Management Strategies
Alternatively, we should use defensive strategies like bear put spreads to protect against a sudden rejection at this resistance level. A drop below the 1.1500 mark would likely send the pair down toward the 50-day SMA at 1.1465. With the Federal Reserve maintaining its benchmark interest rate at 4.00%, any hawkish surprise from upcoming US central bank minutes could quickly trigger this bearish slide back to 1.1400.
