EUR/USD Positive Indicators
The 14-day RSI at 63.92 is still positive, remaining above the center point. Although it has cooled from recent highs, it suggests that buyers are still in control.
The nine-day EMA is above the 50-day EMA, supporting a rising trend. EUR/USD stays above both averages, maintaining the short-term upward trend.
The upward-sloping nine-day EMA offers support. Staying above it keeps a higher, stable movement path.
EUR/USD might reach 1.1800 and possibly the three-month high of 1.1808. Further increases might target 1.1918, the highest since June 2021, and then 1.1930.
If it drops below the nine-day EMA and the lower channel boundary, momentum could weaken, testing the 50-day EMA at 1.1673 and possibly the three-week low of 1.1589.
Euro Market Context
Today, the Euro is weakest against the Australian Dollar. The changes in the Euro’s value against major currencies are noted.
On December 29, 2025, the EUR/USD pair is testing a critical support level around the nine-day EMA of 1.1757. Although the broader trend has been upward, momentum has slowed for four sessions, indicating a crucial moment ahead.
This weakness in the Euro may be justified, as recent data shows a gap between central bank views. The latest estimates for December 2025 showed Eurozone inflation dropping to 2.1%, close to the ECB’s target, possibly leading to rate cuts in 2026. In contrast, US core PCE inflation data from last week remained firm at 2.8%, reinforcing the Federal Reserve’s recent stance to keep rates elevated.
The strong US jobs report from early December 2025, adding over 200,000 jobs, supports the dollar’s strength. Given this economic scenario, a break below the 1.1757 support level seems likely. Traders should monitor this level for signs of a deeper downturn.
For those expecting a rebound, 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 relies on the nine-day EMA providing solid support. The Relative Strength Index, while lower, remains above 50, indicating some buying power remains.
If the pair decisively breaks below 1.1757, buying put options would be a wise response. A put strategy would target a move down toward the 50-day EMA at 1.1673. This aligns with the fundamental pressure from the diverging US and Eurozone economies.
Market Liquidity and Speculator Behavior
We should consider that market liquidity is currently low due to the holiday season but is expected to increase in the first full week of January 2026. Historically, this return of volume can lead to significant movements as new positions are established for the year. Recent CFTC data from before Christmas showed large speculators starting to reduce their net-long Euro positions, hinting at this potential change in sentiment.
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