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EUR/USD Daily Chart Analysis

EUR/USD Constrained by Option Expiries and Technical Levels, Eyes on PCE Data

Over the past two weeks, the EUR/USD pair has been confined within a narrow range of 1.08 to 1.09, primarily due to the influence of significant option strike expiries. These expiries generate hedging activities that help maintain the pair’s price movements within this defined range, a pattern that has persisted this week. During the UK and US holidays, the pair fluctuated within an even tighter range of 1.0846 to 1.0859, highlighting strong resistance at recent daily highs. The high from May 16 at 1.0895 acts as a notable cap, with sell orders positioned around the 1.0900 mark, suggesting that any upward movement may face substantial selling pressure, limiting potential gains.

Support on the downside is provided by the 100-day moving average (DMA) at 1.0813 and the ascending 21-DMA at 1.0795, creating a solid foundation to prevent significant declines. This technical setup defines a well-established range, buffered by these moving averages, thereby mitigating the risk of extreme volatility. Additionally, the current low level of option-implied volatility indicates that the market does not anticipate significant fluctuations in the near term, supporting the expectation of continued range-bound trading. Traders will be keenly observing key economic indicators, such as the German IFO index on Monday and the Euro Zone’s HICP and U.S. PCE data on Friday, which could potentially trigger a breakout from this narrow trading range. Until these events, the pair is likely to remain constrained by the existing technical and option-related barriers.