EUR/USD is currently at 1.1645 on Tuesday, March 10, 2026, marking a third consecutive session of gains following a significant rebound from Monday’s near four-month low of 1.1507. The 138-pip recovery from Monday’s floor to Tuesday’s current level represents a significant technical adjustment — it reflects a substantial repricing of the dollar’s safe-haven premium as Trump’s ceasefire signals intersect with conflicting military reports. The pair is maneuvering through a particularly intricate macroeconomic landscape, where each figure in the existing framework warrants careful analysis instead of broad assumptions. The US Dollar Index is currently positioned around 95.38-98.75, contingent on the reference point used. Various data sources present differing snapshots as the dollar fluctuates in response to real-time geopolitical developments. Across all readings, it is evident that the greenback is experiencing a notable decline against the Australian dollar, with the AUD appreciating by 0.92% against the USD during Tuesday’s session — marking the most significant movement in the major currency cross matrix. The EUR appreciated by 0.08% relative to the dollar, the GBP increased by 0.21%, whereas the JPY was the sole major currency to decline against the dollar, decreasing by 0.05%. The AUD’s strength and the JPY’s weakness illustrate a consistent narrative from contrasting perspectives: as risk appetite strengthens and commodity prices recover from a downturn, currencies tied to commodities rise, while conventional safe havens such as the yen are offloaded.
Monday’s decline to 1.1507 was influenced by strong demand for the safe-haven dollar, as oil surged towards $119. Additionally, Iran’s IRGC announced it would determine the conclusion of the conflict on its own terms, while markets incorporated the most pessimistic inflationary outlook into the dollar’s valuation. The underlying mechanics of extreme situations reveal that when energy prices pose a risk of a supply shock reminiscent of the 1970s, there is a significant influx of capital into dollars, as dollar liquidity represents the most substantial reservoir globally during true crises. The EUR/USD experienced a decline from over 1.164 to 1.1507 during that period of panic — a significant drop of 133 pips that indicated not a weakness in Europe, but rather an increase in dollar hoarding. Tuesday’s reversal to 1.1645 indicates the unwinding of that panic premium. Trump’s remarks indicating that the operation is “very complete, pretty much,” along with his declaration that the US Navy will escort tankers through the Strait of Hormuz, have altered the immediate considerations. Oil plummeted over 10%, the dollar’s crisis appeal diminished, and EUR/USD regained the territory it had lost during the turmoil. The pair has now recorded gains for three consecutive sessions following the low observed on Monday. Three consecutive sessions of gains following a geopolitical shock bottom represent a technically significant pattern — indicating that the downward movement was a result of exhaustion rather than a shift in trend.
The significant resistance that halted the bulls in their previous efforts is positioned at 1.164. Tuesday’s trading around 1.1645-1.1652 is examining that precise level. The determination of the next 200-300 pip directional move hinges on whether it breaks and maintains a position above 1.1679-1.1680, where the 0.5 Fibonacci retracement, the descending channel resistance, and the 50-day EMA all converge at the same point. The DXY declined beneath the 0.50 Fibonacci level at 98.62 after not managing to sustain the gains it achieved at 99.68. On the 4-hour chart, the index is currently consolidating around 98.59, positioned directly above the 50-day EMA at 98.55. The RSI has decreased to 45, indicating that bullish momentum is diminishing, though it has not yet transitioned to a fully bearish stance. The formation indicates trading within an ascending channel, yet the presence of weakening candles closing below short-term support suggests a classic signal for a potential channel breakdown. Immediate support is positioned at 98.37, aligning with the 0.618 Fibonacci level. If that level is breached, the subsequent significant support stands at 97.55, indicating a possible decline exceeding 100 points in the DXY from the present position. Resistance levels are identified at 99.18 and 99.68. The 200-day EMA at 98.10 serves as the significant support level. The analysis indicates that the dollar’s rebound from its war-induced low is showing signs of diminishing momentum. A decline beneath 98.37 propels EUR/USD towards 1.1714 and possibly 1.1765, with the 200-day EMA on the euro side acting as the upper resistance barrier.
The essential factor sustaining demand for the DXY is the combined risk posed by Wednesday’s CPI report and the continuing conflict in Iran. If CPI exceeds expectations — with the consensus forecast at 2.4% for headline and 2.5% for core year-over-year — the dollar may experience a swift technical recovery as expectations for holding rates are solidified. The CME FedWatch indicates a 95% likelihood that the Fed will maintain current rates during the meeting scheduled for March 17-18. A strong print solidifies that, and may drive DXY back toward the 99.18-99.68 resistance level. A soft print does the opposite — the 57.2% probability of a July rate cut is reinforced, the dollar weakens, and EUR/USD surpasses 1.1680. The employment report for February has placed the Federal Reserve in a notably challenging position. Payrolls decreased by 92,000 — a notable shortfall in absolute terms — while the unemployment rate rose to 4.4% from 4.3% in the previous month. The labor market is showing signs of softening precisely as oil prices are indicating a heightened risk of inflation. The Federal Reserve’s dual mandate of maintaining price stability while achieving maximum employment is currently creating conflicting pressures. This tension will be a key factor influencing the direction of the dollar in the upcoming 60 days. Bank of America economist Aditya Bhave argued on Tuesday that the market’s assumption of an automatic hawkish response from the Fed following an oil shock is misguided. The comparison he makes is precise: in 2022, following Russia’s invasion of Ukraine and the spike in energy prices, core PCE exceeded 5%, unemployment fell below 4%, and payrolls were increasing at a rate of 500,000 per month. Currently, unemployment stands at 4.4%, with payrolls recently reported at -92,000. Additionally, the fiscal support that previously bolstered consumer spending in 2022 is now largely missing. In this context, a supply shock may equally lead to rate cuts — should consumption decline — as it could to rate hikes. The 2-year Treasury yield, reflecting short-term Federal Reserve rate expectations, has been closely aligned with oil prices since the onset of the Iran conflict. Should oil stabilize around $75-$80, the aggressive rate outlook will likely reverse concurrently, leading to a decline in the dollar’s key support foundation.
ECB policymakers are confronting a similar challenge from the European perspective. Martin Kocher emphasized that the ECB “mustn’t act too swiftly.” Madis Müller recognized that the likelihood of a rate hike has risen, yet cautioned against hasty decisions. Gediminas Šimkus indicated that a more profound crisis might impact both inflation and growth at the same time — the stagflation trap. The ECB’s measured approach indicates that neither the Fed nor the ECB is providing the market with explicit directional signals regarding interest rates. This lack of clarity is the reason EUR/USD remains confined within a narrow range instead of exhibiting a strong trend in either direction. Both central banks rely on data in an environment where the key metrics — influenced by oil prices — are evolving more rapidly than any analytical model can account for. When we distill the analysis to its core elements, the EUR/USD can be viewed as a derivative influenced by the dynamics of the Strait of Hormuz. Every reliable indication of conflict resolution results in a decline of the dollar and an increase in the EUR. Every reliable indication of escalation yields contrary results. The IRGC’s statement on Tuesday asserting that “it is we who will determine the end of the war” serves as a stark contrast to Trump’s optimistic timeline. The warning from Iran to ships regarding transit through the Strait introduces an immediate supply risk premium into oil and subsequently impacts the dollar. The EUR/USD pair fluctuated from 1.1507 to 1.1645 and then settled around 1.1630 within a 24-hour period — representing a movement of 138 pips driven by geopolitical factors.
Dmitri Demidenko articulated the structural issue clearly: the trajectory of EUR/USD is predominantly influenced by oil prices. This correlation led to the pair experiencing its most significant single-day surge since January, following a 20% drop in Brent prices, only to relinquish half of that gain as conflict indicators resurfaced. Capital Economics estimates that Brent could reach as high as $150 per barrel if the Strait of Hormuz remains completely closed, with a stabilization around $130 in a prolonged disruption scenario. With oil prices in the range of $130-$150, the dollar experiences a significant rise, leading the EUR/USD to test and fall below the 1.1507 level. This movement may allow it to approach the 1.1419 target, which technical analysis suggests is the next major support following a confirmed breakdown. The alternative scenario: should the G7 effectively orchestrate a strategic petroleum reserve release via the IEA — the very purpose of the IEA’s extraordinary Tuesday meeting — oil prices may decline further, the dollar’s appeal as an inflation-driven safe haven could diminish, and EUR/USD would have a clear trajectory towards 1.1714-1.1765. The two scenarios encompass the current 250-350 pip range within which the pair is expected to fluctuate until there is clarity regarding the Strait situation.