EUR/USD may see a rise towards a two-month high of 1.1804, supported by a bullish bias. The 14-day Relative Strength Index of 62.11 signals strong upward momentum without reaching overbought levels. The pair tests support at the nine-day EMA of 1.1713.
The pair remains weak for the fourth session, trading around 1.1720 during Asian hours on Friday. Technical analysis on the daily chart shows a bullish bias, as the pair stays within an ascending channel pattern. It holds above the nine- and 50-day EMAs, indicating a continued bullish trend.
Potential EUR/USD Climb
There is potential for EUR/USD to climb towards 1.1804 and possibly higher to 1.1850. If support breaks, it could test the 50-day EMA at 1.1644 or the three-week low of 1.1589 recorded on December 1.
Against major currencies, the Euro shows varied performance today, being weakest against the US Dollar. The heat map visualises percentage changes of major currencies against each other, using the left column for the base currency, and the top row for the quote currency. This analysis is aided by AI tools and market expertise.
Given the EUR/USD is testing a key support level near 1.1713, we should view this as a potential opportunity to enter long positions. The pair remains in a clear ascending channel, indicating the underlying trend is still upward despite four days of weakness. This pattern suggests the current dip could be a temporary consolidation before the next move higher.
We can consider buying call options with strike prices around 1.1800, perhaps with an expiry in late January 2026, to capitalize on a potential rebound. This bullish outlook is strengthened by recent data showing Eurozone inflation for November 2025 came in at 2.7%, slightly above forecasts and keeping pressure on the European Central Bank to delay any rate cuts. We remember a similar dynamic in late 2023 when stubborn inflation figures supported the Euro against a softening dollar.
Risk Management and Key Levels
A sustained bounce from the current 1.1700 support area would confirm our bullish bias, with an initial target being the recent high of 1.1804. A break above that level could see the pair move towards the upper channel boundary around 1.1850 in the first few weeks of 2026. The Relative Strength Index at 62.11 shows healthy momentum with room to run before the market is considered overbought.
However, we must also manage our risk in case the support at 1.1700 fails. This scenario could be triggered by stronger-than-expected US economic data, such as the upcoming retail sales figures for December 2025. A decisive daily close below the ascending channel would be a strong signal to hedge long positions or initiate speculative shorts by buying put options.
If the 1.1700 support breaks, the next key level to watch would be the 50-day EMA at 1.1644. A drop to this level would represent a significant shift in short-term market sentiment. This would put the three-week low of 1.1589 back into play as a potential target for any bearish strategies.
