The euro is trading at approximately 1.1760, reflecting a decline of about 0.25% for the session. This movement follows a decisive drop below the key level of 1.1750 during the American trading hours, influenced by three converging factors impacting the market simultaneously. Kevin Warsh’s Senate confirmation testimony is signaling a Fed regime change, the re-closure of the Strait of Hormuz is reigniting safe-haven dollar demand, and March U.S. retail sales printed 1.7% against 1.4% consensus — a meaningful upside surprise that mechanically resuscitates U.S. dollar strength after weeks of consistent weakness. The pair has been confined within a narrow range of 1.1750-1.1800 for several sessions, and the recent downward movement holds the potential to develop into a more significant trend if the combination of factors continues to favor a stronger dollar in the next 72 hours. Every major variable that matters for the euro is currently aligned against it, and the numbers embedded in the tape reveal precisely where EUR/USD is likely to travel next. The brief optimism observed last week regarding the reopening of the Strait of Hormuz and advancements in ceasefire negotiations has dissipated entirely. The waterway, responsible for the transit of approximately one-fifth of global crude on a daily basis, has faced closures in recent sessions. Reports indicate a U.S. seizure of an Iranian vessel, while multiple incidents involving ships have emerged in the news. Additionally, negotiations have reached a standstill since the weekend. Tehran is currently indicating a potential withdrawal from upcoming negotiations if its demands are not satisfied, amidst the context of a ceasefire that is scheduled to end on April 22. The current environment is directly contributing to the demand for USD via the traditional safe-haven route. The DXY remains stable within the range of 98.00-98.40, currently facing resistance at 98.30. Its decline has halted, largely due to the lack of clear de-escalation signals from the Middle East context. For EUR/USD, this is of significant importance — the euro’s capacity to push past 1.1850 towards the higher end of its recent range is being constrained primarily by the stabilization of the dollar, rather than any specific strength or weakness of the euro itself.
Kevin Warsh’s confirmation hearing before the Senate Banking Committee is providing the anticipated hawkish tone that dollar bulls were prepared for. Warsh is clearly advocating for a shift in the Federal Reserve’s approach, contending that the central bank has strayed from its commitment to price stability. He expressed skepticism regarding the effectiveness of forward guidance as a policy instrument. He also suggested that if the Fed kept a smaller balance sheet, rates could structurally remain lower — which in the short term indicates a commitment to continued pressure for balance-sheet normalization. Rate markets are adjusting in response. The 2-year Treasury yield reached a session peak of 3.77%, reflecting an increase of five basis points, whereas the 10-year stands at 4.288%. CME data now shows the market assigning over 56% probability that the Fed holds rates through the end of 2026, and roughly 40% probability that the hold extends all the way to June 2027. This represents a significant change from the accommodative pricing reflected in foreign exchange positioning only a few weeks prior. The current U.S. rates stand at approximately 3.75%, while the eurozone rates hover around 2.15%. This 160-basis-point interest rate differential consistently supports the attractiveness of dollar-denominated assets. Chris Turner from ING indicated that EUR/USD might reach 1.1850 if Warsh adopted a dovish stance — however, that situation has evidently not occurred, and the contrary trend is currently unfolding. In March, U.S. retail sales experienced a notable increase of 1.7% month-on-month, surpassing the consensus expectation of 1.4%. Additionally, the ex-auto component also exceeded forecasts. February’s figure was adjusted upward to 0.7%, an increase from the original 0.6% report. The Retail Sales Control Group, integral to Personal Consumption Expenditures calculations, maintained a robust trajectory. Excluding the impact of gasoline-price inflation, core consumer demand remains at 0.6%, which is considered strong by any reasonable standard. The year-over-year growth of 4% indicates that the American consumer remains resilient, even in the face of a 24.1% increase in gasoline prices and a 30% surge in Brent crude prices since the onset of the Iran conflict. That reinforces Warsh’s hawkish framing and undercuts any lingering case for Fed cuts in the near term. At present, every component of the U.S. macroeconomic framework supports a stronger dollar, and there is no fundamental factor in EUR/USD that could disrupt this trend in the short term.
The euro faces more than just a challenge from the strength of the dollar; it is underpinned by deeper issues related to the fundamental weaknesses within the eurozone. The German ZEW Survey Economic Sentiment for April plummeted to -17.2 from -0.5 in March, marking a significant 16.7-point decline that indicates institutional investors in Europe’s largest economy perceive risks as intensifying rather than stabilizing. The current print presents significant challenges for EUR in establishing a foothold, irrespective of developments on the dollar front. Market expectations indicate that an ECB rate hike at the April meeting is largely considered unlikely, while there is currently a 68% probability assigned to a potential hike in June. ING anticipates that the ECB will implement that June action primarily to safeguard the central bank’s credibility in combating inflation. Even if the hike occurs, the impact on EUR/USD support is limited — a 25-basis-point ECB adjustment only slightly narrows the rate differential and does not alter the fundamental growth divergence narrative with the United States. One element significantly countering the bearish argument: the ECB’s Balance of Payments data for February showed ongoing robust foreign investment in eurozone assets, with EUR 280 billion in equities and debt acquired in merely the first two months of the year. The U.S. TIC data does not indicate direct sales of long-term U.S. assets; however, the extent of foreign interest in eurozone securities implies that new capital is gradually shifting into the region. This creates a foundational support for the euro, restricting the extent of significant declines the pair can endure in any given session. In the absence of that inflow dynamic, EUR/USD would likely be trading nearer to 1.1660 or lower. The persistent foreign demand is exactly what supports the euro around the 1.1730-1.1744 range, preventing it from dropping to lower support levels.
From a technical perspective, EUR/USD has been forming higher lows since mid-March, which tentatively establishes a short-term ascending trendline framework. Provided that aggressive selling does not occur, that structure may solidify as the prevailing chart pattern in the weeks ahead. The RSI is currently positioned above the 50 level, indicating that bullish momentum is still present; however, the indicator line has begun to flatten, which implies that buying pressure is diminishing and moving towards a more neutral state. The MACD reflects that trend, as the histogram remains above the zero line, albeit with a diminished slope, suggesting ongoing but waning upward momentum. The near-term bullish sentiment continues to be supported as long as the price stays above the 20-day exponential moving average at 1.1690 and the 50% Fibonacci retracement at 1.1744. The RSI is presently at approximately 59, indicating a positive stance without being overstretched — this reading aligns with a continuation within a range rather than signaling a breakout or breakdown. The technical framework for EUR/USD is distinctly outlined. On the upside, 1.18000 represents the critical psychological resistance — sustained trade above this zone could unlock a more aggressive bullish trend. The 61.8% Fibonacci retracement is positioned at 1.1823, with additional resistance at the 78.6% level around 1.1936 and the cycle peak close to 1.2080. On the downside, the 50% retracement at 1.1744 serves as immediate support, with the 20-day EMA at 1.1690 and the 38.2% retracement at 1.1665 following closely behind. Significant structural support is identified at the 23.6% level around 1.1567, while 1.15904 serves as the crucial medium-term baseline beneath the primary moving averages. A decline beneath 1.1730 would reveal 1.1660 as the subsequent significant area of demand. The neutral middle-ground pivot at 1.16735 coincides with the 50- and 200-period moving averages; a loss of that zone distinctly shifts the broader bias to bearish.
GBP/USD is currently positioned near 1.3510 following a recent rebound, maintaining its position above an ascending trendline support while encountering resistance at 1.3600. The UK Unemployment Rate surprisingly decreased to 4.9% in the three months leading up to February, surpassing the anticipated 5.2% consensus. That should have been favorable for sterling; however, GBP/USD is having difficulty holding onto the 1.3500 level — which encapsulates the broader FX narrative. When a significant currency struggles to maintain its position despite favorable domestic data, primarily due to the influence of the dollar, it clearly indicates that the USD is currently the primary force behind all major pairs. If GBP maintains its position above 1.3480, the trajectory leads to 1.3580. A decline beneath that upward trendline reveals 1.3400. The euro is experiencing the same mechanical dynamics in relation to the dollar, with a significant tightening of the correlation between the two pairs observed in recent sessions. The indications of persistent dollar strength are evident across a range of currencies beyond just the major pairs. Gold has plunged toward the $4,720 zone, extending weekly declines as USD strength and skepticism about U.S.-Iran talks combine to pressure the precious metal. The S&P 500 at 7,125 and Nasdaq at 24,490 have both reached record highs, with risk assets absorbing the dollar-strength impulse through the earnings-resilience channel rather than faltering. Bitcoin has reclaimed $76,000 on optimism surrounding discussions with Iran. The AUD/USD is experiencing a decline as the dollar strengthens across the board. Every FX major is conveying a consistent narrative: risk sentiment is divided, the dollar is reaffirming its position as the clearest reflection of macro uncertainty, and euro weakness is a resultant symptom rather than a fundamental cause.
Presenting the probability distribution with clarity, the base case scenario, assigned a weight of approximately 55%, indicates that EUR/USD will consolidate within the range of 1.1730 to 1.1820 in the upcoming sessions. Intraday dips below 1.1750 are expected to be met with foreign-inflow demand, yet no significant breakout is anticipated in either direction. The bearish scenario, assigned a probability of approximately 30%, suggests a decisive move below 1.1730, which would reveal 1.1660 as the next significant support level. This could lead to further acceleration towards 1.1567, contingent on a smooth confirmation from Warsh and a hawkish tone from the April 29 FOMC meeting. The optimistic outlook, assigned a probability of about 15%, hinges on a significant diplomatic advancement in the Middle East — specifically, a confirmed extension of the ceasefire along with the reopening of Hormuz. This development would likely result in a depreciation of the dollar, propelling EUR/USD past 1.1820 towards 1.1850 and possibly reaching 1.1936. The current macro setup indicates a clear downside bias, although the dynamics of foreign inflows and the structural ascending trendline help to avert a chaotic decline. For traders positioning around these levels, a disciplined approach entails scaling rather than making aggressive commitments in either direction. Short exposure has been initiated following a confirmed breakdown beneath 1.1730, presenting targets at 1.1690, 1.1665, and further down to 1.1567, with tight stops set at 1.1780 to manage risk effectively. Long exposure is only justified upon a confirmed reclaim and acceptance above 1.1820, aiming for targets of 1.1850 and 1.1936, with stop-losses positioned just below 1.1770. The range between 1.1740 and 1.1800 represents a period where directional advantage diminishes — entering trades within this zone is a typical method to relinquish profits and losses. The most effective approach in the present situation is to exercise patience, allowing the Warsh testimony to finish, awaiting the ceasefire resolution on April 22, and permitting the April 29 FOMC decision to provide the macro catalyst that initiates significant directional movement.