Bearish Perspective
Bullish Perspective
The EUR/USD pair has dipped below the significant 1.1800 mark, largely due to escalating tensions between the US and Iran. A drop to 1.1765 would signify a notable decline from this month’s peak of 1.1850.
US-Iran Tensions Rise
The decline in the EUR/USD pair is closely linked to ongoing tensions between the US and Iran. Iran recently announced the closure of the Strait of Hormuz, which may push oil and energy prices higher.
This closure was attributed to what Iran claims is the US’s failure to meet its obligations. Meanwhile, President Trump has reaffirmed the US’s commitment to maintain the blockade against Iranian shipping.
Reported by the Wall Street Journal, there are suggestions that the US military might board certain Iranian ships at sea, a move that could escalate the situation further.
The next significant reaction from the EUR/USD pair is anticipated following comments from European Central Bank (ECB) President Christine Lagarde. In a recent statement, she mentioned that the ongoing conflict has impacted the economy and that officials are weighing their options for the upcoming meeting.
On Tuesday, the exchange rate will also be influenced by new data on U.S. retail and pending home sales. Economists predict retail sales will have slowed to 2.4%, down from 3.7% last month.
Additionally, the pending home sales report is expected to show a 0.7% increase in home sales for March. Market expectations suggest that the US Federal Reserve will maintain current interest rates in their next meeting.
Technical Analysis of EUR/USD
The EUR/USD has been recovering since hitting a low of 1.1410 on March 13. Last week’s rise to a high of 1.1850 has now reversed amid growing geopolitical tensions.
Currently, the pair is maintaining its position above a crucial support level at 1.1640, which represents the neckline of a double bottom pattern. It remains above the supertrend indicator and the 50-day exponential moving average (EMA).
As a result, the pair could potentially continue to decline towards the significant support level at 1.1650. However, a bullish outlook would emerge if it surpasses this month’s high of 1.1850.
