EUR/USD Positive Indicators
The 14-day RSI at 63.92 remains positive above its midline. Despite cooling from recent peaks, it indicates buyer control.
The nine-day EMA rises above the 50-day EMA, reinforcing a bullish trend. EUR/USD stays above both averages, keeping the short-term uptrend intact.
The upward-sloping nine-day EMA provides dynamic support. A sustained hold above it maintains a higher path of least resistance.
EUR/USD could reach 1.1800, and potentially the three-month high of 1.1808. Further gains might target 1.1918, the highest since June 2021, followed by 1.1930.
On the downside, breaking the nine-day EMA and the lower channel boundary could weaken momentum. This might test the 50-day EMA at 1.1673 and potentially the three-week low of 1.1589.
Euro Market Context
The Euro today was weakest against the Australian Dollar. Euro’s percentage changes against major currencies are included.
As of today, December 29, 2025, we are seeing the EUR/USD pair testing a critical support level around the nine-day EMA of 1.1757. Although the broader trend has been bullish, momentum has been cooling for four straight sessions. This suggests a pivotal moment is approaching in the next few weeks.
This weakness in the Euro may be fundamentally justified, as recent data shows a divergence between central bank outlooks. The latest flash estimates for December 2025 showed Eurozone inflation falling to 2.1%, nearing the ECB’s target and opening the door for potential rate cuts in 2026. In contrast, the US core PCE inflation data from last week remained stubborn at 2.8%, supporting the Federal Reserve’s recent message to keep rates higher for longer.
The strong US non-farm payrolls report from early December 2025, which added over 200,000 jobs, also continues to support the dollar’s strength. Given this economic backdrop, a break below the 1.1757 support level seems increasingly plausible. Traders should watch this level closely for signs of a deeper correction.
For those anticipating a bounce, buying call options with a strike price above 1.1800 could be a defined-risk strategy to capture a move toward the December 24th high. This play relies on the technical support at the nine-day EMA holding firm. The Relative Strength Index, while lower, is still above 50, indicating some buying power remains.
Conversely, if the pair decisively breaks below 1.1757, buying put options would be a prudent response. A put strategy would target a move down toward the 50-day EMA at 1.1673. This would align with the fundamental pressure from the diverging US and Eurozone economies.
Market Liquidity and Speculator Behavior
We should also consider that market liquidity is currently thin due to the holiday season but is expected to return in the first full week of January 2026. Historically, this return of volume can spark significant moves as new positions are established for the year. The latest CFTC data from before Christmas showed large speculators were already starting to trim their net-long Euro positions, hinting at this potential shift in sentiment.
