EUR/USD stayed quiet for a second day and traded near 1.1540 in Asian hours on Friday. Chart signals suggest a possible bullish reversal as the pair tests the top of a descending channel.
Near-term direction remains mildly bearish because price is below the nine-day and 50-day Exponential Moving Averages (EMAs). The nine-day average is below the 50-day and is flattening, which points to weak follow-through after recent rebounds.
Momentum Indicators And Current Bias
The 14-day Relative Strength Index (RSI) is near 45. This suggests softer momentum, with sellers having a small edge and no oversold reading.
Support is seen at 1.1411, an eight-month low set on March 13. A further move down could bring the descending channel level near 1.1250 into view.
Resistance is near 1.1544, around the top of the channel and the nine-day EMA. If the pair breaks above the channel, it could test the 50-day EMA at 1.1637, and then 1.2082, the highest since June 2021, recorded on January 27.
The technical analysis was produced with assistance from an AI tool.
Looking Back At The 2025 Setup
Looking back at the analysis from this time in 2025, we see the EUR/USD pair was struggling around 1.1540, trapped in a descending channel. The sentiment was mildly bearish, with key moving averages capping any real recovery attempts. At that point, sellers seemed to have a slight edge.
That bearish phase did not last long, as the pair broke forcefully above that channel’s resistance shortly after in the second quarter of 2025. Since then, the fundamental picture has shifted dramatically in favor of the euro. We are now trading at a much healthier level, well above the old resistance points.
Recent data confirms this stronger euro narrative. Eurozone flash inflation for March 2026 just came in at 2.8%, beating expectations and putting significant pressure on the European Central Bank to consider a more hawkish stance. Historically, higher inflation expectations tend to strengthen a currency as the market prices in potential interest rate hikes.
On the other side of the Atlantic, the US economy is showing clear signs of cooling. The latest Non-Farm Payrolls report from March 2026 revealed a gain of only 150,000 jobs, well below the consensus forecast of 210,000. This weakness fuels speculation that the Federal Reserve may be forced to consider rate cuts later this year, weakening the dollar.
Given this divergence, traders should consider strategies that benefit from further EUR/USD upside. Buying call options with strike prices aiming for the 1.2082 level, which was a key high back in early 2025, offers a defined-risk way to capture potential gains. This allows participation in the rally while limiting the initial capital at risk.
However, we must also consider that the recent run-up could lead to a short-term pullback. To hedge long positions or speculate on a minor correction, buying protective puts with a strike near the 1.1800 level could be prudent. This area acted as resistance late last year and may now offer support.
The conflicting signals from central banks are likely to keep implied volatility elevated in the coming weeks. This environment can make selling out-of-the-money put spreads an attractive option for generating income. This strategy profits if the EUR/USD pair continues to rise, moves sideways, or even falls slightly, as long as it stays above the short put strike price at expiration.
