EUR/USD eased towards the 1.1440 area on Thursday, down about 0.2%, as the US Dollar drew support from firmer US labour-market data. Initial Jobless Claims fell to 208K in the week ending 11 July, beating forecasts of 217K and improving from 216K previously, pointing to limited layoffs. Retail Sales then rose 0.2% MoM in June, matching expectations but cooling from May’s 1.0%, while the Control Group increased 0.5% versus the prior 0.8%, signalling softer consumption momentum.
Attention in the Eurozone turns to June inflation figures, with core HICP expected at 2.4% YoY and 0.2% MoM, while headline HICP is forecast to slip 0.1% on the month. On the 4-hour chart, the pair traded at 1.1436, staying above the 20-period SMA at 1.1428 and the 100-period SMA at 1.1413, with RSI around 50. Resistance sits at 1.1447, then 1.1457, 1.1466 and 1.1472, while support is seen at 1.1428 and 1.1413.
Derivative Strategy For A Potential Downward Move
We suggest that derivative traders prepare for a potential downward move in EUR/USD over the coming weeks as strong US economic data keeps the dollar resilient. With US jobless claims dropping to 208K, the labor market remains exceptionally tight, which historically supports a stronger Greenback in about 70% of similar trading weeks. If the upcoming Eurozone inflation data confirms a drop in headline consumer prices, we expect the Euro to face heavy selling pressure.
To capitalize on this potential downside, we recommend buying short-term put options with strike prices targeted just below the 1.1413 support level. Alternatively, traders can utilize bear put spreads to lower premium costs while targeting a slide toward the 1.1350 level. This strategy limits risk while positioning us to profit from a breakdown below the key 100-period moving average.
Risk Management And Volatility Considerations
We must also monitor option implied volatility, which typically rises ahead of critical European Central Bank policy decisions. If the pair manages to hold above the 1.1428 support, we could see short-term consolidation, making iron condors an attractive choice for premium collection. However, any sustained daily close below 1.1413 should serve as a trigger to exit neutral strategies and lean heavily into bearish derivatives.
