EURUSD reverses its upward movement as the US dollar stays supported during the conflict between the US and Iran

Market Fundamentals Overview

US Dollar (USD)

The US dollar experienced broad weakness on Thursday, following news that eased geopolitical tensions and improved risk sentiment. However, this shift was short-lived, as the dollar began to recover on Friday after the Wall Street Journal revealed that the US was deploying warships and thousands of marines to the Middle East, despite President Trump’s previous statements about avoiding ground involvement in Iran.

Later, CBS News reinforced these reports, indicating that the Trump administration was preparing extensively for the possible use of ground forces in Iran. Over the weekend, President Trump issued a 48-hour ultimatum to Iran, demanding the reopening of the Strait of Hormuz or threatening strikes on critical infrastructure.

With the deadline approaching and Iran showing no signs of compliance, market participants remain cautious. Unless there is genuine de-escalation, the US dollar is expected to maintain its upward trajectory, supported by safe-haven flows and expectations of further rate hikes.

Euro (EUR)

The European Central Bank (ECB) opted to keep interest rates unchanged, while revising inflation forecasts higher and lowering growth projections. The ECB maintained its data-driven, meeting-by-meeting guidance, refraining from committing to any specific rate path.

Officials emphasized that the impact on inflation will depend on both the severity and duration of the ongoing conflict, as well as the influence of energy prices on consumer costs and the broader economy.

Sources within the ECB suggested that discussions about raising rates could begin at the April meeting, with potential tightening in June if the conflict persists. Market reactions were strong, with expectations for 85 basis points of rate hikes priced in by the end of the year.

EURUSD Technical Analysis – Daily Chart

Examining the daily timeframe, EURUSD retraced to the 1.16 level last week before reversing course due to escalating geopolitical developments. Should another pullback occur, sellers are likely to defend the trendline, aiming for a move toward 1.1395. Conversely, buyers will be watching for a breakout above resistance, which could pave the way for a rally toward 1.18.

EURUSD Technical Analysis – 4-Hour Chart

On the 4-hour chart, an ascending trendline marks the recent retracement from the 1.14 level. If the price approaches this trendline, buyers may step in, managing risk below it, to extend the recovery toward the main downward trendline. Sellers, meanwhile, will seek a breakdown below support to increase bearish positions, targeting a move to 1.1395.

EURUSD Technical Analysis – 1-Hour Chart

Looking at the 1-hour timeframe, a minor descending trendline highlights the prevailing bearish momentum. If a retracement occurs, sellers are expected to defend the trendline, aiming for further declines, while buyers will look for a breakout above resistance to target the major downward trendline near 1.1650. The red lines indicate today’s average daily range.

Key Upcoming Events

• Tomorrow: Eurozone and US PMI releases
• Thursday: US Jobless Claims report

Market attention remains focused on developments in the US-Iran conflict. Stay alert for breaking news and updates.