EUR/USD is currently at 1.1600 on Thursday, reflecting a decline of 0.32% for the session after it was unable to maintain a recovery toward 1.1650 during the early European hours — a rejection that was entirely foreseeable due to the structural forces acting against the pair at the same time. The U.S. Dollar Index remains steady at 98.90, bolstered by the ISM Services PMI rising to 56.1 in February, surpassing the consensus estimate of 53.5 and the previous reading of 53.8 — a notable 2.6-point increase that indicates the U.S. service sector is growing at its quickest rate in months, providing the dollar with the economic rationale for sustained strength, in addition to the safe-haven demand stemming from the Iran conflict. Two factors are currently supporting the dollar simultaneously — demand for a safe haven due to geopolitical tensions and expectations for interest rates to remain steady based on data. Meanwhile, the euro is contending with a particular energy crisis stemming from Qatar’s cessation of LNG production following Iranian attacks on its key facility. The majority of LNG imported by Europe comes from Qatar. A supply disruption of that magnitude significantly elevates European energy prices, rekindles inflation expectations within the eurozone, and brings forth concerns regarding the potential for ECB policy inaction, which could hinder the necessary rate cuts for European growth. The combination is harshly unfavorable for the euro while being beneficial for the dollar at the same time.
The strike on Qatar’s LNG facility, linked to Iran, is not just another risk event in the Middle East for EUR/USD; it represents a deliberate disruption to the crucial supply chain that European energy security relies on most directly. Qatar stands as the foremost LNG supplier for Europe, and any halt in its production facilities leads to an instant spike in spot LNG prices within European markets. This surge impacts utility costs, manufacturing input prices, and ultimately reflects in CPI figures throughout the eurozone. The recent surge in European TTF natural gas prices due to the strike in Qatar indicates that consumers and businesses across Europe will encounter increased energy costs in March-April 2026. This situation is likely to diminish real disposable income, curtail consumption, and place the ECB in a challenging predicament similar to that of the Fed: facing rising inflation driven by energy expenses while simultaneously experiencing a slowdown in growth. This scenario reflects stagflation, where every monetary policy choice adversely affects one goal while safeguarding another. The disruption in Qatar’s LNG supply introduces a euro-specific downside for EUR/USD, extending beyond the broader narrative of dollar strength. The U.S. stands as a net energy exporter — elevated LNG prices translate into a significant revenue boost for domestic producers. Europe relies on energy imports, and elevated LNG prices act as a persistent burden on economic performance. This disparity between the advantages of U.S. energy exports and the expenses of European energy imports exemplifies the type of fundamental divergence that supports prolonged currency trends instead of resolving within a matter of days. The ongoing Iran conflict and the impairment of Qatar’s LNG facility suggest that the energy cost disparity between the U.S. and eurozone will likely lead to further declines in EUR/USD, despite any temporary technical recoveries.
DXY stands at 98.90 — Trendline support remains intact, Services PMI recorded at 56.1, and the Fibonacci structure limits EUR/USD recovery. The DXY maintaining 98.90 is the crucial technical level for assessing EUR/USD’s short-term ceiling. The 98.90 level coincides with the ascending trendline support and the 0.5 Fibonacci retracement level at 98.62 — two distinct technical frameworks coming together to render the level structurally important. The 50-EMA and 200-EMA remain positioned above the DXY price, indicating a short-term bullish trend within the ascending channel. Resistance overhead at 99.18 has led to uncertain price movements — the RSI retreating from overbought levels toward 55-60 — yet this deceleration in momentum does not indicate a reversal. This represents the typical consolidation pattern that occurs before the next upward movement, contingent upon the absorption of the 99.18 resistance level. A consistent move of the DXY above 99.18 paves the way to 99.68 and eventually the significant 100.00 level — each step contributing to further pressure on EUR/USD beneath 1.1600. The EUR/USD pair is presently holding onto the 0.236 Fibonacci retracement level at 1.1600, following a downward trend established by the descending channel since it reached 1.2082 — the peak since June 2021. This level now serves as a far-off bullish target, necessitating a clear breakout above 1.1800 for it to gain analytical significance. The current setup shows the price positioned below the 9-day EMA at 1.1705 and the 50-day EMA at 1.1758. Both indicators are trending downward, clearly indicating a bearish medium-term trend. The 14-day RSI moving back toward the low-30s from recent overbought levels indicates that selling pressure is intensifying rather than waning — an overbought RSI that normalizes downward without leading to a sustained price recovery is considered one of the most dependable bearish continuation signals in technical analysis.
The current tight consolidation range of EUR/USD between 1.1600 and 1.1679 does not suggest base-building; instead, it indicates compression ahead of the next directional shift. Every technical indicator — descending channel, sub-EMA price, falling RSI, and a dollar-bullish macro backdrop — suggests a move downward rather than upward. The series of support levels beneath the current EUR/USD trading at 1.1600 is clearly defined: 1.1551 represents the initial significant demand zone where long positions can be considered on hourly charts. The 1.1531 level marks the 3-month low that was upheld two days ago with a strong bullish pin bar — the rejection candle indicating that buyers entered the market decisively at that point. Should the price drop below 1.1531, the subsequent key technical target is the seven-month low at 1.1468, with the lower boundary of the descending channel close to 1.1450 following that. These two levels — 1.1468 and 1.1450 — indicate around 1.5% further downside from Thursday’s 1.1600 level, which could be reached within days if the 1.1600 Fibonacci floor does not hold on a daily close. The 1.1531 pin bar rejection warrants careful consideration in analysis. A significant rejection candle at a previous support level that persists over several sessions indicates the presence of buyers at that price — however, the key question remains whether these buyers possess enough conviction to withstand the continuing dollar demand and the energy shock from Qatar. Considering that the macro factors influencing EUR/USD to decline remain unchanged — the ongoing Iran conflict with no timeline for the reopening of Hormuz, persistent disruptions in Qatar LNG, and U.S. economic data consistently outperforming expectations — the likelihood of 1.1531 holding against another test is diminished compared to the chance of it breaking, especially if DXY surpasses 99.18 following the next strong data release or escalation news.
On the positive side, the resistance levels are clearly outlined: 1.1617, 1.1662, and 1.1672 serve as the entry points for short positions where sellers are situated within the descending channel. A move beyond 1.1680 paves the way to 1.1714 and 1.1759, yet these targets are significantly higher than Thursday’s 1.1600 consolidation. Achieving them necessitates a substantial weakening of the dollar, which hinges on either a de-escalation in Iran tensions pushing DXY back under 98.00 or U.S. economic data falling short enough to reignite rate cut expectations, currently sitting at a 37% likelihood for June. The ISM Services PMI increased to 56.1 from 53.8 — surpassing the 53.5 consensus by 2.6 points — indicating that the U.S. service sector, accounting for about 80% of U.S. GDP, is gaining momentum rather than slowing down despite the geopolitical situation in Iran. A services PMI exceeding 56 is not a slight improvement — it indicates a level aligned with above-trend economic growth, leaving the Federal Reserve with no rationale for reducing rates. Fed Governor Barkin’s remark that “the Fed will go meeting by meeting” reflects a consistent conclusion: with services PMI at 56.1, productivity at 2.8%, and jobless claims remaining steady at 213,000 — below the anticipated 215,000 — the data composite for the U.S. economy is clearly robust, supporting the dollar and placing pressure on EUR/USD.
The eurozone lacks any equivalent data offset. The PMI readings in Europe continue to lag behind those in the U.S., while energy costs in Europe are increasing due to the disruption in Qatar’s LNG supply. The ECB is navigating a challenging policy landscape, where reducing rates could potentially reignite inflation driven by energy prices, whereas maintaining rates might exacerbate the ongoing growth slowdown. The divergence in monetary policy between the U.S. and the eurozone — with the Fed maintaining restrictive levels due to a robust economy, while the ECB may need to consider cuts in response to a weakening economy — serves as the core narrative for EUR/USD, which is being mirrored in the technical descending channel observed in price action. EUR/USD presents a selling opportunity on any rebound towards 1.1662-1.1680. The descending channel structure remains unchanged, with DXY maintaining a level of 98.90. The Services PMI at 56.1 supports the case for ongoing dollar strength, while the disruption in Qatar’s LNG supply is exerting energy cost pressures specific to the eurozone that the U.S. is not experiencing. The RSI is trending down toward the low-30s, indicating increasing selling pressure, and both the 9-day EMA at 1.1705 and the 50-day EMA at 1.1758 are declining, acting as dynamic resistance. Short positions at 1.1617, 1.1662, or 1.1672 with stops set above local swing highs aim for targets at 1.1531, 1.1468, and the lower boundary of the channel at 1.1450. The sole situation that would shift the current negative outlook is a verified daily close above 1.1800 — necessitating simultaneous de-escalation in Iran, a weakening dollar, and normalization of European energy prices. None of those conditions exist on Thursday.