On Monday, during European trading, the EUR/USD pair rose by around 0.4% to approximately 1.1560. This uptick for major currencies came as market sentiment leaned towards riskier assets, particularly the euro, following Iran’s indication that it would accept a US ceasefire proposal via Pakistan.
This shift in investor sentiment has led to a decrease in demand for the US dollar as a safe haven. At the time of reporting, the US Dollar Index (DXY), which measures the dollar against six major currencies, was down nearly 0.4%, hovering around 99.80. In Asian trading, the dollar index found some stability above the 100.00 mark.
Iran confirmed it had received the ceasefire offer but emphasized it wouldn’t agree under pressure or tight deadlines. Additionally, it stated that the Strait of Hormuz, crucial for transporting about 20% of the world’s oil, would not be reopened for a “temporary ceasefire.”
Looking ahead, investors are keenly waiting for the US ISM Services PMI data for March, set to be released at 14:00 GMT. Expectations suggest the Services PMI will drop to 55.0 from 56.1 previously.
This week’s major highlights include the minutes from the March Federal Open Market Committee (FOMC) meeting and the Consumer Price Index (CPI) data for March, expected to be released on Wednesday and Friday, respectively.
Analysis of EUR/USD
Currently, the EUR/USD is trading around 1.1560, just below the 20-day exponential moving average (EMA) near 1.1570, indicating a mild bearish inclination while prices are contained beneath this point. The formation of a symmetrical triangle at lower levels hints that the broader trend might be shifting sideways, potentially leading to a bullish reversal.
The 14-day Relative Strength Index (RSI) indicates a shift from below 40.00 to within the 40.00-60.00 range, suggesting a persistence of a bullish bias, although upward momentum appears to be waning.
Initial resistance is seen near the 20-day EMA at 1.1570, followed by a downtrend line area at around 1.1600. A breach above this zone could weaken the bearish outlook and open up possibilities for 1.1660. On the downside, immediate support rests on the uptrend line from 1.1408, currently bisecting near 1.1500. If that level breaks, it could target the late 1.14 area. A sustained decline below 1.1450 would confirm a further downward trend towards the March low of 1.1411.
