The Euro is projected to trade between 1.1280 and 1.1400 against the US Dollar. In the long term, additional Euro strength is anticipated, though short-term range trading might continue.
Following a sharp rally in the Euro last week, a pause in the upwards trend was noted. The Euro traded in a narrower range than expected, closing 0.10% lower at 1.1349. It is projected to continue within the 1.1280 to 1.1400 range today.
The next resistance level stands at 1.1500. Despite potential Euro strength, overbought short-term conditions suggest ongoing range trading. The ‘strong support’ level has shifted from 1.1180 to 1.1210.
Forward-looking statements note inherent risks and uncertainties, advising research before making investment decisions. Markets and instruments mentioned are for information and not as recommendations. Responsibility for risks, losses, and costs lies with the investor. The views in this piece are of the authors and do not indicate any official position. Authors and the source will not be responsible for errors or omissions and are not investment advisors.
While the Euro’s strong rally last week hinted at renewed bullish sentiment, the move has encountered some resistance. After the surge, price action pulled back modestly, settling at 1.1349 – just under a tenth of a percent down on the day. This mild decline suggests that the initial momentum has cooled slightly, at least for the moment. Conditions remain compressed, and the currency pair is now caught within a tighter intraday band, with expectations for continued movement between 1.1280 and 1.1400 in the days ahead.
This tighter consolidation zone implies that short-term trading strategies might now focus more on retracement and mean reversion rather than chasing impulsive trends. Traders should be cautious about leaning too much into a directional bias, particularly given the slight overreach into technically overbought territory in recent sessions.
The resistance ceiling up at 1.1500 remains intact, and it will take a broader shift in sentiment or data to break cleanly through that level. While medium-term appreciation of the Euro still appears viable, that outcome is less likely to play out in the near term. Room to the upside may be limited for now.
Meanwhile, support has firmed, nudging up from 1.1180 to 1.1210. This subtle adjustment in the downside buffer could reflect a gradual shift in positioning, with buyers stepping in a bit earlier. For us, that provides reassurance that pullbacks are being cushioned, even as upward progress stalls.
By treating short-term pullbacks as opportunities inside the existing price channel, positions can be sized with tighter risk parameters. What’s important here is not spotting the next high, but rather recognising the edges and trading the range with discipline. Buyers are still present, but no longer in a rush.
From a volatility perspective, we can see just how much conditions have compressed compared to last week’s action. Implieds have flattened, and with a diminished directional skew, short-dated options may require more active management until a break materialises. Spreads and delta hedging strategies can be restructured accordingly.
There’s also an understandable tendency to overcorrect following a sharp rally, but we would guard against extrapolating downside too confidently. The existing support level has not cracked, so any short exposure should consider the likelihood of sideways price movement rather than expecting a fresh trend reversal.
Risk parameters should be rebalanced to reflect tighter intraday moves and rising implied resistance near 1.1400. For us, patience continues to be rewarded inside well-defined bands. Let prices come to you.
