The Euro is currently trading around 1.1702 against the US Dollar as Thursday progresses, with intraday movements fluctuating between a low of 1.1679 and a recovery toward 1.1714, ultimately stabilizing within the 1.1688 to 1.1702 range that has characterized much of the American morning. The pair has recorded three straight sessions of losses, continuing a pullback that initiated after the advance faltered at confluent resistance around 1.1814/26 earlier this week. The US Dollar Index reached a 10-day peak of 98.80 intraday before retreating slightly to 98.57, with some readings at 98.487, highlighting that the Greenback is the main influence in this scenario rather than any significant developments related to the Euro. The broader context is equally significant as the minute fluctuations — the pair reached an intraday low of 1.1505 last month, rebounding over 3.8% from that yearly low, before facing the 1.618% extension of the March advance and the 61.8% retracement of the February decline at the 1.1814/26 area, which together prompted the ongoing retracement. The failure at the confluence zone has altered the immediate market dynamics from a phase of corrective-consolidation to one of corrective-retracement. The upcoming trading sessions will be crucial in determining if the uptrend will reestablish itself or if a more profound structural unwind will occur. The primary factor currently impacting the Euro-Dollar cross is the geopolitical situation surrounding the Strait of Hormuz, which has significantly diverted the pair from its usual macroeconomic influences. President Donald Trump announced on Truth Social that the United States possesses “total control over the Strait of Hormuz” and stated that “no ship can enter or leave without the approval of the United States Navy,” along with a directive to the Navy to “shoot any boat putting mines in Hormuz.” The rhetoric encounters an Iranian stance that continues to be steadfast and resolute.
Mohammad Bagher Ghalibaf, the speaker of the Iranian parliament and lead negotiator, characterized the reopening of the Strait as “impossible” as long as the US and Israel persisted with what he referred to as “flagrant” violations of the ceasefire. The dual blockade — the US blockade of Iranian ports and Tehran’s de facto control of Strait passage — has maintained a persistent risk of supply disruption and kept the oil complex elevated, with approximately 20% of seaborne crude volumes transiting the waterway. Trump has announced an indefinite extension of the ceasefire, awaiting a new peace proposal from Iran. This situation results in a unique stalemate, where neither escalation nor de-escalation is clearly defined. The second round of peace talks encountered a standstill as Iran declined to participate unless the naval blockade was lifted. Vice President JD Vance interrupted his trip to engage in these discussions, while Iranian state media labeled any further dialogue as a “waste of time.” Reports indicating that Iran’s Islamic Revolutionary Guard Corps Navy has seized two vessels have introduced additional tension. The overall impact on currency markets indicates that the Dollar attracts safe-haven interest during times of uncertainty, while it tends to lose value when peace prospects seem viable. This dynamic results in being influenced more by news headlines than by underlying fundamentals. The American data docket on Thursday presented a notably robust set of readings that, under normal circumstances, would have propelled the Dollar significantly higher, yet it did not achieve that outcome. The S&P Global flash Manufacturing PMI for April recorded a value of 54.0, surpassing the consensus estimate of 52.5 and the previous figure of 52.3, marking the highest level in 47 months. The Services PMI registered at 51.3, surpassing the forecast of 50.0 and the previous figure of 49.8, marking a two-month high. Additionally, the Composite PMI increased to 52.0 from 50.3. Both the production and new orders sub-indices within manufacturing have achieved multi-year highs; however, expectations for output in the upcoming year saw only a slight improvement and continue to be historically low. Initial jobless claims for the week ending April 18 came in at 214,000, exceeding the consensus range of 210,000 to 212,000 and reflecting an increase of 6,000 from the previous reading of 208,000. Continuing claims increased to 1.82 million. The intriguing result is that the Dollar did not take advantage of the positive data surprise, indicating a technical pullback instead of a fundamental rejection — traders had anticipated Dollar strength in the PMI release and opted to take profits once the headlines aligned with expectations.
The monetary policy landscape is arguably the single most critical fundamental perspective for in the coming weeks, and the setup is truly atypical. The Federal Reserve is now widely anticipated to maintain rates at their current levels for the rest of the year, marking a significant change from previous forecasts that had incorporated multiple rate cuts into the curve. The probability indicated by CME Group data for the Fed maintaining the funds rate within the 3.50% to 3.75% range at the April 29 meeting stands at 99.5%, effectively removing any imminent monetary easing factor that might have undermined the Dollar. During his confirmation hearing, Fed nominee Kevin Warsh highlighted the critical need to uphold the central bank’s autonomy from the White House. This event unfolded without significant surprises, reinforcing the prevailing “higher-for-longer” narrative. Across the Atlantic, markets are progressively factoring in the likelihood of ECB rate hikes — not holds, not cuts, but genuine tightening — influenced by the inflation risk arising from high oil prices impacting the supply chain. The historical significance of that divergence cannot be overlooked. The divergence between market expectations for Fed policy and ECB policy has reached its widest point in months, typically favoring a stronger Euro. However, the concurrent rise in geopolitical risk premium is providing support for the Dollar. The ongoing tension between these two forces explains why the pair has faced challenges in making a clear move in either direction, remaining confined close to the 1.1700 pivot point. Although the narrative surrounding the ECB’s rate hikes theoretically supports the Euro, the actual economic landscape within the currency bloc reveals a much more concerning situation than the rates discussion implies. The Eurozone Q4 2024 GDP growth recorded 0.3% quarter-on-quarter, in contrast to the United States’ 0.8%. Core inflation was at 2.3% in the Eurozone, while the US reported 2.6%. The unemployment rate stood at 6.4% in the Eurozone compared to 3.9% in the US. Additionally, the Manufacturing PMI for the Eurozone was 47.2, whereas the US figure was 49.8. These metrics highlight ongoing growth disparities that are unfavorable for the Euro. The preliminary PMI releases for Germany and the Eurozone on Thursday did not generate any buying interest, and overall sentiment data continues to show weakness. The ECB has indicated that its approach to interest rates will be contingent on incoming data as the “Iran shock” develops, according to sources such as Nomura, suggesting that the bank is observing the situation before making any definitive moves. The current hesitation limits the potential for Euro appreciation, as the pair struggles to gain momentum on a hawkish ECB narrative that remains unsubstantiated by tangible measures. The Euro finds itself caught between a stagnant domestic economy and a progressively hawkish rates narrative, resulting in the range-bound behavior that has characterized the pair over the past several weeks.
The technical architecture on the daily timeframe is clearly at a critical juncture. EUR/USD experienced a significant increase of over 3.8% from the yearly low of 1.1505, before encountering resistance at the confluence zone of 1.1814/26. This area is characterized by the 1.618% extension of the March advance and the 61.8% retracement of the February decline. The pair has now declined over 1.1% from that peak and is nearing the lower limits of the March uptrend framework. The 200-day simple moving average is positioned around 1.1810, while weekly pivot calculations indicate resistance at 1.1832. This suggests that the supply cluster between 1.1810 and 1.1832 constitutes a critical barrier that bulls need to overcome to confirm the uptrend. The daily RSI neared 68 prior to the onset of the pullback, indicating a state of near-term exhaustion without entering the outright overbought zone. The annual open resistance is positioned at 1.1745, representing the initial significant level that the pair needs to regain in order to stabilize the market conditions. The essential support range is positioned between 1.1667 and 1.1682, characterized by the swing high from March 10, the 200-day moving average, and the 38.2% retracement of the upward movement from the yearly low. The next level of support is established by the January low-close and the complete extension of the January decline, which ranges from 1.1598 to 1.1612. The four-hour structure indicates that is trading within a consolidation range around 1.1736, with price extending down to 1.1693. The MACD signal line is positioned below zero and is pointing firmly downward, reflecting a consistent bearish momentum on the lower timeframe. The pair is showing signs of a downward movement toward 1.1680 on the hourly chart, with the possibility of a corrective rebound to 1.1711 prior to a continued decline toward 1.1620. The Stochastic oscillator, with its signal line positioned below 20 and trending downward, indicates persistent short-term downside pressure. The two-hour chart indicates that has fallen significantly below its ascending channel, a development that implies the recent movement was a true bull rally rather than just a phase of consolidation. The breach below the mid-channel support and the 50-period moving average holds substantial structural significance. There have been several rejections at 1.1835, with the price forming lower highs. Additionally, trading beneath the lower channel boundary indicates a confirmed breakdown. The RSI on intraday charts has fallen into oversold territory, which technically reinforces the bearish stance while also increasing the likelihood of a short-term rebound to correct the positioning extreme.
The ongoing technical discussion on the higher timeframes revolves around the role of the 1.1825 zone — particularly the 61.8% Fibonacci retracement level — as either a significant barrier or merely a temporary halt. The level has been tested three times within six trading sessions, indicating a likely precursor to a directional resolution instead of ongoing range-bound activity. The Ichimoku Cloud indicates that the price is nearing resistance within the cloud, which corresponds with the Fibonacci level. The analysis of Bollinger Bands reveals that the pair is trading at the upper band boundary, suggesting a potential for mean-reversion pressure. The MACD indicates that bullish momentum is slowing down as the pair nears the resistance level. The alignment across multiple timeframes is notably precise — the weekly chart indicates 1.1825 aligns with a trendline established from the 2022 highs, while the monthly chart positions this level close to the 38.2% retracement of the extended 2017-2024 range. As of January 2025, the Commitments of Traders data indicated that leveraged funds had decreased their net long positions in the Euro by 18% from the peaks observed in December 2024, reflecting notable institutional caution in anticipation of the upcoming test. Asset managers have kept their positioning relatively stable, resulting in a divergence in sentiment between short-term speculators and longer-term allocators. Historical analysis of Fibonacci tests indicates that when approaches significant retracement levels accompanied by high volume, the average subsequent movement is 2.8% in the direction of the resolution within a span of ten trading sessions.