Insights 
VT 
The Euro is expected to see minor fluctuations, edging lower within the 1.1625/1.1660 range in the short term. Analysts note this as part of a broader 1.1580/1.1690 range-trading phase.
Recent trading saw Euro movements between 1.1637 and 1.1675, closing down slightly by 0.09% at 1.1640. While there may be a downward drift, a clear fall below 1.1625 is not anticipated.
Long Term Outlook
Longer-term analysis suggests upward momentum could build if the Euro breaks and ends above 1.1720, pushing toward 1.1760. However, this momentum has weakened despite not dipping below the 1.1625 support level. Current movements are seen as a continuation of range trading.
Overall, these trends indicate a likely maintenance within the specified price brackets rather than any immediate major breakouts.
The Euro’s upward momentum has clearly faded after failing to break higher last week. We now see the EUR/USD pair settling into a trading range, likely to be contained between 1.1580 and 1.1690 in the coming weeks. For now, any dips are expected to be shallow, finding support around the 1.1625 level.
This shift in sentiment aligns with recent comments from the European Central Bank, which has signaled a continued cautious approach to monetary policy. Eurozone inflation data for September, confirmed at 2.8%, has cooled from earlier highs, giving officials little reason to adopt a more aggressive stance. This policy outlook is likely to cap any significant strength in the Euro for the time being.
Market Dynamics
On the other side of the pair, the US dollar is finding support from persistent inflation concerns. The latest US Consumer Price Index reading came in slightly above expectations, keeping the possibility of further Federal Reserve tightening on the table. This dynamic is contributing to the pressure on EUR/USD and reinforces the idea of a contained range.
For derivative traders, this environment suggests that selling volatility could be a viable strategy. With the pair expected to be range-bound, strategies like short strangles or iron condors with strikes outside the 1.1580/1.1690 range may be attractive. The goal is to profit from the passage of time as long as the currency pair remains within these established boundaries.
We are seeing this reflected in market indicators, as the Cboe EuroCurrency Volatility Index has dipped to its lowest point in several months, indicating low expectations for a major price swing. This low-volatility environment is reminiscent of the sideways market action we experienced through much of the second half of 2024. Therefore, collecting premium appears more favorable than positioning for a directional breakout.
Given the failed rally, selling out-of-the-money call options with strike prices above 1.1700 could be a prudent approach to capitalize on the faded upward momentum. However, risk management is key, and traders should define their exit points in case the 1.1580 support or 1.1690 resistance levels are decisively broken. The latest Commitment of Traders report shows a slight reduction in bullish Euro bets, supporting this view.
