Insights 
VT 
The EURUSD is experiencing a continual decline with minimal upward corrections, maintaining a downward trend. The pair has broken below a crucial swing area between 1.1614 and 1.16309, which now serves as a risk marker for sellers, as staying below this zone suggests a downward bias.
Upcoming targets include a minor support zone between 1.1555 and 1.1561. Additionally, 1.15378 marks the 38.2% retracement of the May–July rally and stands as a vital target if further decline occurs.
Moving Average Analysis
On the 5-minute chart, the falling 100-bar moving average, currently around 1.16475 and decreasing, defines short-term risk. An upward move above 1.16309, without sustaining it over the 100-bar MA, favours a bearish perspective. The moving average, moving rapidly downward, is nearing the 1.1630 level, underscoring this bearish sentiment.
Given the firm downward momentum, we believe derivative traders should position for further declines in the coming weeks. The fundamental driver for this is the widening policy gap between the US Federal Reserve and the European Central Bank. This divergence makes holding US dollars more attractive than euros, creating sustained pressure on the pair.
To add credibility to this view, recent data shows US inflation in March was a stubborn 3.5%, pushing expectations for Fed rate cuts further out. In contrast, Eurozone inflation fell to 2.4%, increasing the likelihood that the ECB will cut rates as early as June. This fundamental mismatch supports a continued bearish trend for the currency pair.
For traders, this environment favors strategies that profit from falling prices or limited upside. We see value in buying put options to speculate on a drop towards the next key support levels. Alternatively, selling out-of-the-money call spreads offers a way to generate income while maintaining a view that any rallies will be capped.
Managing Positions and Historical Context
The key swing area identified now becomes a critical zone for managing these positions. Any failure to break back above that ceiling should be seen as a confirmation to hold or add to bearish bets. The declining short-term moving average also provides an excellent guide for timing new entries on any minor intraday bounces.
Historically, periods of significant monetary policy divergence, such as in 2014 and 2022, have led to prolonged and deep declines in the pair. The current macroeconomic setup is strikingly similar, suggesting the move towards the 38.2% retracement target is not just possible, but probable. We should therefore treat any corrective rally with skepticism unless the underlying economic data fundamentally shifts.
