The EURUSD currency pair has reached a new low for the day, continuing within a narrow trading range. The range currently measures 47 pips, significantly below its average of 88 pips.
From a technical standpoint, the pair is distancing itself from a swing area between 1.1692 and 1.17028. This movement deprives buyers of nearby support and boosts sellers’ confidence. Attention is now on several downside targets: the 200-hour moving average at 1.16674, the 61.8% retracement level at 1.16615, and the 100-hour moving average at 1.16522.
Important Support Zone
These levels form an important support zone. Falling below this zone could reverse Friday’s upward momentum, affecting those who bought above these levels during the previous upward movement.
We are seeing EURUSD slip to new lows, but the market is quiet with a daily range well below the recent average. Sellers are gaining confidence as the price moves away from the 1.1700 swing area. The focus is now on the critical support zone between the 200-hour moving average at 1.1667 and the 100-hour moving average at 1.1652.
This technical pressure is reinforced by fundamental data, with Eurozone CPI for July 2025 coming in below target at 1.9%. This has increased bets that the European Central Bank will maintain a dovish stance, especially with officials scheduled to speak at the Jackson Hole symposium later this week. Any hint of future easing could easily push the pair through that support cluster.
Policy Divergence
Conversely, the dollar is supported by a strong labor market, after the July 2025 Non-Farm Payrolls report added over 250,000 jobs, crushing expectations. Federal Reserve minutes from earlier this month showed a continued hawkish bias, keeping the door open for another rate hike in 2025. This policy divergence is creating a significant headwind for the euro.
The current tight trading range implies low volatility, making options strategies attractive. Given the downside risk, traders should consider buying puts or establishing bear put spreads targeting a move below 1.1650. This provides a defined-risk approach to profit from a breakdown should the fundamental and technical pictures align.
We have seen this setup before, as the policy divergence between a hawkish Fed and a more cautious ECB drove significant dollar strength back in 2022. A decisive break below the 100-hour moving average would be the signal that Friday’s rally was a false start. This would confirm that the path of least resistance is lower for the pair.
