The EUR/USD pair is currently positioned at 1.1590 on Tuesday, March 24, 2026, reflecting a decline of about 0.20% for the session, following an intraday low of 1.1567 observed earlier today. The 23-pip range between the session low and the current price illustrates the complexities of a currency pair influenced by multiple factors. On one hand, there is a strengthening U.S. dollar, bolstered by safe-haven demand and a hawkish stance from the Federal Reserve. On the other hand, the Euro is receiving unexpected support from rising expectations of ECB rate hikes, which seemed unlikely just eight weeks prior. Additionally, the overarching macroeconomic environment is shaped by an oil shock that is actively altering the strategies of central banks worldwide. The U.S. Dollar Index is currently positioned around 99.30, following a retreat from an intraday peak of about 99.50. It has appreciated roughly 3% since the onset of the Iran conflict on February 28. The 3% dollar movement against a basket of major currencies may appear modest at first glance. However, when you delve into the implications for EUR/USD, European corporate margins, ECB policy decisions, and the critical 1.1600 level, it becomes clear that this shift carries significant weight in the current landscape of major currency pairs. The EUR/USD pair is approaching a descending trendline that has been directing the overall downtrend since the pair was trading around 1.17. The price reached an intraday high of 1.1637 during Tuesday’s session before experiencing a pullback. Sellers emerged at that resistance level with sufficient conviction to halt the upward movement and drive EUR/USD back below 1.1600. The pivot point at 1.1576 serves as the immediate support threshold. Below that, 1.1532 and 1.1486 serve as horizontal support levels that correspond with prior reaction lows observed in the recent trading history. A decisive move above 1.1637 would pave the way for a potential rise to 1.1697. The 50-period moving average is showing signs of an upward shift, while the 200-period moving average continues its downward trajectory — presenting a conflicting momentum signal that encapsulates the inherent contradiction in this pair’s current positioning. The RSI is approaching 60, indicating a resurgence in upward momentum, yet it remains below overbought levels. This suggests that there is technical capacity for EUR/USD to advance further, provided a fundamental catalyst emerges.
The GBP/USD scenario offers valuable insights into the broader dynamics of the dollar. Sterling is currently positioned at 1.3439, maintaining its stance above the previously significant resistance level of 1.3387 that had impeded the pair until buyers executed a robust recovery from the support zone of 1.3254–1.3299. GBP/USD remains positioned above its 200-period moving average at 1.3380, with the shorter 50-period average showing an upward trend around 1.3360. This indicates an enhancement in the short-term outlook for sterling, independent of the EUR/USD dynamics, implying that the dollar’s strength is impacting major currency pairs in a disparate manner. Significant resistance levels for GBP/USD are identified at 1.3477, followed by 1.3530, and subsequently at 1.3575. A move above 1.3477 may lead to further gains toward 1.3530, whereas a drop below 1.3387 would reveal 1.3344 and 1.3299 as the subsequent support levels. The primary reason behind EUR/USD’s struggle to maintain a level above 1.1600 is clear — it is the same influence that has been constraining all assets that gain from a weaker dollar since February 28. The CME FedWatch Tool indicates that a U.S. interest rate cut is essentially not an option for the rest of 2026. As the situation in Iran escalated on February 27, market participants assigned a 96% likelihood to the prospect of at least one Federal Reserve rate cut occurring before the end of the year. The likelihood has diminished to approximately 10%. The U.S. 10-year Treasury yield has increased to 4.37%, approaching its peak since July 2025. This rise is attributed to the energy shock stemming from the Iran war, which is directly influencing inflation expectations, thereby rendering the Federal Reserve’s easing strategy both politically and economically unfeasible. The Producer Price Index increased to 3.4% in February prior to the onset of the conflict. The headline Consumer Price Index registered a rate of 2.4% during the same month. With Brent crude above $103 per barrel and WTI above $91, both numbers are poised for significant increases in the coming months. Additionally, every basis point of increase in realized inflation moves the Fed further away from the rate cut that EUR/USD bulls require to maintain a breakout above 1.1637. The technical structure of the DXY on the 2-hour chart indicates that the index is oscillating around 99.20, maintaining support from an ascending trendline and the 200-period moving average positioned just beneath 99.00. The support zone has consistently functioned as a near-term floor following the DXY’s rejection at the 100.15 resistance level. The DXY is presently positioned beneath its 50-period moving average at around 99.60. The consolidation within the 99.20–99.45 range illustrates the prevailing uncertainty affecting all major asset classes at this moment.
The market acknowledges that the dollar ought to be robust due to the rate differential and safe-haven demand; however, it is also factoring in the potential for a genuine ceasefire in Iran to dramatically alter the macroeconomic landscape in an instant. The supply zone ranging from 99.40 to 99.45 has been limiting significant recoveries. An upward movement past 99.80 paves the way to 100.15, whereas a breach of the 99.00 support level would reveal 98.89 and subsequently 98.58 as the next targets. The DXY’s ability to maintain levels above 99.00 during Tuesday’s session, in light of mixed PMI data and volatility surrounding Iran, underscores the robustness of the dollar’s fundamental support. The energy shock, rate differential, and safe-haven demand are three distinct factors converging to reinforce this trend. The recent release of the S&P Global Purchasing Managers Index data on Tuesday morning marks the first significant economic survey following the escalation of the Iran war, and the figures present particular implications for EUR/USD that extend beyond the headline readings. The U.S. preliminary composite PMI decreased to 51.4 in March, down from 51.9 in February — marking its lowest point since April 2025, during the period of Liberation Day tariffs impacting U.S. businesses. The Services PMI decreased to 51.1 from 51.7, reaching an 11-month low. Manufacturing delivered the sole positive surprise, increasing to 52.4 from 51.6. Both figures continue to exceed the 50 mark — the threshold separating growth from contraction — yet the prevailing trend is clearly declining. The details of the report are crucial for currency markets: inflationary pressures are increasing while growth is decelerating, a scenario that S&P Global Chief Business Economist Chris Williamson characterized as “an unwelcome combination of slower growth and rising inflation” — a straightforward depiction of stagflation, as articulated by the organization conducting the surveys. The Eurozone PMI data that came before the U.S. figures presented a significantly concerning outlook. The Eurozone Composite PMI decreased to 50.5 in March, down from 51.9 in February, marking a 10-month low. Meanwhile, the Services PMI declined to 50.1 from 51.9, just above the expansion-contraction threshold. Williamson characterized the Eurozone data with the stagflation label, indicating that it was “ringing stagflation alarm bells” as elevated energy costs linked to the Middle East conflict drive prices upward while concurrently impacting demand and confidence. The macro environment presents a distinctly bearish outlook for EUR/USD. European growth is slowing at a quicker pace than that of the United States.
Additionally, European businesses face heightened vulnerability to energy price fluctuations due to the EU’s reliance on imported energy, in contrast to the energy-exporting United States. Furthermore, the level of policy uncertainty surrounding the ECB is greater than that of other major central banks. Despite expectations, EUR/USD remains stable. The price is maintaining a position above 1.1567. The rationale stems from the expectation of an ECB rate hike, which has emerged from the inflationary data concurrently hindering growth. The current market sentiment indicates a full pricing in of two rate hikes from the European Central Bank, marking a significant shift from the previous consensus that anticipated the ECB would maintain its stance through 2026. Martins Kazaks, a member of the ECB Governing Council, stated on Tuesday: “Rate hikes may be needed if inflation spreads from energy” and affirmed that “bets on two hikes are plausible.” The current hawkish stance of the ECB represents a critical factor for EUR/USD bulls, as it suggests that the interest rate differential between the U.S. and Europe, which has historically bolstered the dollar, may be shifting towards a narrowing trend instead of expanding. Should the ECB implement two rate hikes while the Fed maintains or contemplates cuts, the resulting differential shift would significantly favor the euro, potentially pushing EUR/USD above 1.17 and approaching 1.18, assuming both central banks act in line with prevailing market expectations. The disparity in the impact of the Strait of Hormuz closure on the U.S. compared to Europe represents a significantly overlooked aspect of the EUR/USD fundamental landscape, warranting a thorough analysis. The United States has transitioned into a position of being a net energy exporter. As Brent crude surpasses $103 and WTI reaches $91, American energy producers experience direct advantages — their revenues grow, profit margins widen, and the economic strain of elevated energy prices for consumers is somewhat alleviated by the income increases within the domestic energy sector.
The dollar gains from this situation in two aspects: it attracts safe-haven flows amid geopolitical tensions, and it experiences a terms-of-trade enhancement for the U.S. economy compared to energy-importing countries. Europe lacks any equivalent offset. The Eurozone significantly relies on energy imports, operating as a net importer by a considerable margin. As oil prices surge 36% above pre-war levels, European businesses encounter direct increases in input costs, without any revenue compensation from domestic energy production. European consumers are experiencing increased energy costs due to the absence of domestic production revenues that typically help stabilize the economy. The European economy is currently facing a clear decline in terms of trade — the costs of imports are increasing, while the prices of exports are limited due to a slowdown in global demand. The primary factor contributing to the decline of the Eurozone Composite PMI to 50.5 — marking a 10-month low — is contrasted by the increase in U.S. manufacturing PMI, which rose to 52.4. European businesses are not lacking in competence. They are experiencing the impact of an external shock that their American counterparts are either shielded from or potentially gaining advantages from. The observations made by J.P. Morgan and ING regarding “stress-driven outflows” from liquid assets and the prevailing “sell-everything wave” impacting gold positions have indirect implications for EUR/USD. As global risk appetite declines and capital shifts towards safety, the dollar stands to gain due to its status as the primary global reserve currency and its position as the most liquid market worldwide. The demand for the dollar as a safe haven is rooted in structural factors rather than specific events. This demand continues as long as uncertainty remains, and there are no imminent catalysts that could clearly address the uncertainties surrounding the Iran conflict within a relevant timeframe for the current EUR/USD technical situation.