The Euro (EUR) remains steady around 1.16, just below a recent multi-year high from September 2021. This movement arises from changes in central bank policy and easing expectations from the Federal Reserve.

The Germany-US 2-year spread has narrowed by 15 basis points, supporting the Euro. France’s consumer confidence figures remain unchanged, with upcoming consumer confidence data from the euro area and Germany.

The trend for the Euro is bullish with higher lows and highs since February. With the Relative Strength Index (RSI) in the mid-60s, there is potential for further growth until reaching the overbought level at 70.

The 50-day moving average at 1.1377 is marked as a key support level. Nearby support lies in the 1.1550-1.1520 range, with limited resistance expected up to the 1.1720-1.1750 area.

What the initial analysis suggests is that the Euro has been climbing steadily, now hovering just under a peak not seen since late 2021. Much of this is being driven by a shifting stance from central banks, particularly on the US side where monetary tightening appears to be losing steam. The narrowing gap in the 2-year bond yields between Germany and the US – down by about 15 basis points – has been narrowing in favour of the Euro, which is typically aligned with appreciation pressure when US yields ease relative to European ones.

Consumer sentiment in France, meanwhile, has come in flat, and markets are watching closely for similar data from broader eurozone economies, including Germany. While these figures aren’t sparking sudden moves, they remain a useful gauge of internal demand pressures, and can act as background drivers for rates expectations and, in turn, currency direction.

The technical picture lends weight to the current strength. Since February, we’ve seen a classic uptrend develop: higher lows, higher highs. Momentum, reflected by a Relative Strength Index (RSI) settling into the 60s, indicates that there’s still room left before enthusiasm reaches braking-point at the overbought threshold of 70. This allows space for a bit more upside without being regarded as overextended.

From a trend-following perspective, the 50-day moving average, now positioned around 1.1377, serves as the underlying cushion. If the currency were to stall or pull back, eyes would turn to supports in the 1.1550–1.1520 range. Buyers have found comfort in this layer before, and that could repeat upon retest. Above, resistance isn’t expected to come into play until around 1.1720–1.1750, a stretch that has historically attracted offers but hasn’t been tested recently.

In strategy terms, this keeps us in a scenario where upside follow-through looks more likely than not, assuming no abrupt macro shifts. Pricing in derivatives linked to FX should reflect bias towards calls rather than puts at the moment, though stretched upper boundaries can eventually invite profit-taking flows. With implied vols remaining relatively subdued, the cost of optionality could present favourable opportunities for positioning with moderate leverage should the spot price push beyond short-term resistance.

Further in, if euro area confidence data surprise to the upside, that could amplify current trends – especially as US data begins to soften or surprise mildly on the downside. Repricing could accelerate in that case, particularly in the middle tenor of the curve. Skew patterns may also begin to lean heavier as spot gets closer to 1.1750, particularly if momentum traders increase pressure.

What’s encouraging here is that the market appears supported both technically and through a consistent narrative on relative central bank direction. It would be prudent to apply dynamic stops and avoid overcommitment until we see whether 1.1750 offers any meaningful rejection, or lets price drift higher with minimal pushback.

From this spot range, the risk-to-reward still leans favourably for long exposures – at least until the RSI shifts closer to overbought.