EUR/USD Forecast: Key Levels Ahead of ECB and Fed Decisions

At 12:00 (GMT+2), March data on business sentiment from the Centre for European Economic Research (ZEW) will be released. According to forecasts, Germany’s current conditions index is expected to decline from –65.9 to –67.1 points, while the economic sentiment index may drop from 58.3 to 38.7 points. For the eurozone as a whole, the indicator is also projected to fall from 39.4 to 24.0 points, reflecting rapidly growing investor concerns.

The main factor putting pressure on the euro remains the rise in energy prices caused by the blockade of the Strait of Hormuz amid the US-Iran conflict. Brent crude has consolidated above 101.0$ per barrel, and based on the rhetoric from Washington and Tehran, a near-term de-escalation appears unlikely. US President Donald Trump stated that more than 7,000 targets have been struck since the start of the joint operation with Israel, primarily military and commercial facilities. He also claimed that on Kharg Island, home to one of the world’s largest oil terminals, “almost everything has been destroyed” except energy infrastructure, while the risk of further strikes remains.

Against the backdrop of a 30-day US license allowing purchases of already-loaded Russian fuel shipments, Belgian Prime Minister Bart De Wever and Hungarian Prime Minister Viktor Orbán have suggested resuming negotiations with Russia and reconsidering energy imports. In response, EU Energy Commissioner Dan Jørgensen stated that the bloc should not revise its plans to phase out Russian fossil fuels despite Middle East tensions, emphasizing that while energy prices are a concern, supply shortages are not currently a systemic threat. However, he did not rule out further deterioration and called for short-term support measures. Earlier, European Commission President Ursula von der Leyen also warned that resuming trade with Russia would be a strategic mistake.

As a major net importer of hydrocarbons, the EU remains vulnerable to rising energy prices, which worsen terms of trade and increase stagflation risks. According to the IFO Institute, even in the case of a quick resolution of the conflict, Germany’s inflation could reach 2.4% by year-end, while a prolonged crisis could push it above 3.0%, potentially halving GDP growth from the current 1.2%.

On Thursday at 15:15 (GMT+2), the European Central Bank will hold its monetary policy meeting. Analysts expect the regulator to maintain a wait-and-see stance, as the probability of immediate policy changes remains low. However, markets will closely monitor comments regarding developments in the Persian Gulf. Expectations have already shifted, with the first rate cut now anticipated in September rather than July, and any hawkish signals could push EUR/USD toward new lows.

The Federal Reserve meeting will take place on Wednesday at 20:00 (GMT+2) and is also unlikely to bring major policy shifts. Updated inflation projections will be released the same day, likely reflecting increased concerns tied to the Iran conflict, potentially with slight upward revisions. Additionally, Fed Chair Jerome Powell is expected to step down in May, adding another layer of uncertainty for markets.

Support and resistance levels

On the daily chart, Bollinger Bands continue to move downward, with the price range narrowing and signaling mixed short-term dynamics. The MACD indicator is turning upward, forming a tentative buy signal, while the Stochastic oscillator has rebounded from oversold territory, suggesting a potential corrective upside move in the near term.

Resistance levels: 1.1529, 1.1577, 1.1600, 1.1621.

Support levels: 1.1500, 1.1450, 1.1400, 1.1367.

Trading scenarios and EUR/USD forecast

Long positions may be considered after a breakout above 1.1529 with a target at 1.1600. Stop-loss: 1.1500. Timeframe: 1–2 days.

Short positions may be considered after a breakdown below 1.1450 with a target at 1.1367. Stop-loss: 1.1500.