EUR/USD rebounded from the 1.1730–1.1725 area, a one-week low set in Asia, and has filled much of Monday’s earlier gap. It is trading just above the mid-1.1700s after easing from the 1.1850 area, a two-month peak.
The US Dollar has struggled to extend gains as expectations for a US Federal Reserve rate rise have weakened. Geopolitical risk linked to the US-Iran dispute over the Strait of Hormuz remains a factor that could support the Dollar and limit EUR/USD rises.
Technical Snapshot And Momentum
Technically, the pair is holding above the 23.6% Fibonacci retracement of the rise from the late-March low, but it remains below the 100-hour EMA. Momentum measures show RSI near 43 and MACD slightly below zero, pointing to sideways trade with a mild downside lean.
Support levels include 1.1754 (23.6%), then 1.1695 (38.2%) and 1.1648 (50%) if declines continue. Resistance is near the 100-hour EMA at 1.1770, with a break higher exposing 1.1849.
The report notes the analysis was produced with help from an AI tool.
Looking back at the analysis from mid-2025, we were watching EUR/USD struggle around the 1.1750 level. At the time, the market was pricing out Federal Reserve rate hikes, but geopolitical risks in the Strait of Hormuz kept a floor under the dollar. This created a consolidative environment where the pair was capped by its 100-hour moving average.
How The Backdrop Has Changed
Today, the situation has evolved significantly, with the pair now trading near 1.1280. The interest rate divergence we only speculated about in 2025 became a reality, as the Fed enacted two further quarter-point hikes in late 2025 while the European Central Bank held steady. This is supported by recent data showing US core inflation holding at 2.8% year-over-year, while the latest Eurozone HICP figure has softened to just 2.1%.
For the coming weeks, this divergence suggests strategies that favor a stronger dollar or a range-bound to weaker euro. With implied volatility in EUR/USD options having risen to an 8-month high of 9.2%, buying puts to hedge against a drop below 1.1200 could be a prudent move. Selling out-of-the-money call spreads with a strike above 1.1400 might also be attractive to collect premium, capitalizing on the strong technical resistance now established at that level.
Traders should also be mindful of the upcoming US Non-Farm Payrolls report, which will be critical for the Fed’s future path. The market’s reaction to the 2025 US-Iran standoff taught us how quickly safe-haven flows can dominate fundamentals. Any unexpected escalation in current global trade discussions could cause a similar flight to the dollar, making long-dated protective puts more valuable.
