March 20 (Reuters) - Foreign exchange traders can use a simple option strategy to insure against a bigger EUR/USD setback, as the currency pair has faltered ahead of major technical resistance.

Germany's parliament approved plans for a massive spending surge on Tuesday, throwing off decades of fiscal conservatism in the hope of reviving economic growth and scaling up military spending for a new era of European collective defence.

EUR/USD had reached its highest levels in more than five months, hitting 1.0955 ahead of the German vote. However EUR/USD was capped by the major 1.0957 Fibo, a 76.4% retrace of the 1.1214 to 1.0125 (September to February) EBS drop. That increases the risk that the euro could be set for a much bigger relapse in the days and weeks ahead.

Those who want to insure against a bigger EUR/USD fall can buy a one-week 1.0860 EUR put option at a cost of 44 pips, priced with spot at 1.0867. Profit potential is unlimited if spot is below the 1.0816 breakeven point at the March 27 expiry, while losses are limited to the 44 pips premium paid.

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(Martin Miller is a Reuters market analyst. The views expressed are his own)