EUR/USD Holds Near 1.1750 as Safe-Haven Dollar Demand Limits Euro Upside

On Sunday, US naval forces seized an Iranian cargo vessel, after which official Tehran withdrew from the upcoming peace deal negotiations and, according to media reports, tightened control over the Strait of Hormuz, while market concerns over reduced hydrocarbon supplies intensified. Under these conditions, the US currency is receiving support even without new macroeconomic data.

Macroeconomic releases from the eurozone remain mixed: in March, the consumer price index accelerated from 1.9% to 2.6%, reducing the likelihood of monetary easing by the European Central Bank (ECB). At the same time, on Friday ECB President Christine Lagarde warned that the situation in the Persian Gulf could simultaneously accelerate inflation and slow the recovery of EU gross domestic product (GDP). Policymakers remain cautious: ECB Chief Economist Philip Lane and Banque de France Governor François Villeroy de Galhau said that more information is needed before adjusting credit conditions. These comments reduce the probability of an interest rate hike at the April meeting; however, experts believe that rising hydrocarbon prices will eventually push the regulator toward a more hawkish stance. Today, analysts at the International Monetary Fund (IMF) noted that they expect borrowing costs to double by the end of the year. In this environment, it is difficult for the euro to continue the growth seen at the beginning of the month.

The US consumer price index came in at 0.9% month-on-month and 3.3% year-on-year, while the core reading was 0.2% and 2.6%, respectively. Nonfarm payrolls increased by 178.0K, with unemployment at 4.3%, leaving the market with little reason to expect rapid monetary easing from the US Federal Reserve. Fundamentally, this makes the dollar stronger than the euro.

For EUR/USD to move higher now, either a clear geopolitical reversal or a noticeable deterioration in US data is needed; otherwise, the pair’s upside potential appears limited.

Support and resistance levels

The long-term trend remains upward: after reaching the 1.1790 resistance level, quotes are developing a correction, within which a test of the 1.1650–1.1583 support area is expected, where long positions will become relevant with targets at 1.1790 and 1.1927 (the February high).

The medium-term upward trend continues, and the price reached Zone 2 (1.1864–1.1842), from where a decline began toward the key support area at 1.1633–1.1611, where long positions will become relevant with targets at 1.1730 and 1.1849 (last week’s high), while after overcoming Zone 2, a rise toward Zone 3 (1.2080–1.2058) is expected.

Resistance levels: 1.1790, 1.1927, 1.2045.

Support levels: 1.1650, 1.1583, 1.1414.

Trading scenarios and EUR/USD forecast

Long positions may be opened from the 1.1650 level with a target at 1.1790 and a stop-loss at 1.1598. Timeframe for implementation: 9–12 days. Short positions may be opened below the 1.1583 level with a target at 1.1414 and a stop-loss at 1.1659.