EUR/USD is currently hovering around 1.1500, impacted by prevailing risk-aversion sentiments. The Houtis’ entry into the war expands the conflict and delays the prospect of a quick resolution. The macroeconomic backdrop later today will be shaped by German inflation data and comments from Fed Powell. The Euro is currently consolidating last week’s losses around the 1.1500 level on Monday, as the US Dollar gains traction amid a negative market sentiment. Investors are adjusting to the reality of a prolonged conflict in the Middle East, as elevated oil prices present considerable difficulties for the crude oil-importing economies of the Eurozone.
On Monday, the majority of Asian markets have been experiencing declines, while European exchanges are set for a lower opening. US President Trump’s remarks indicating that current Iranian leaders are “very reasonable” have largely gone unnoticed, as investors remain cautious about the involvement of the Iran-backed Houthis, which could escalate the conflict and pose a threat to the Bab el Mandab Strait, a critical chokepoint for oil traffic, potentially exacerbating the situation significantly. In this context, the rallies of the Euro appear to be constrained. The pair is positioned to conclude March with a decline of 2.5%, marking the most significant monthly downturn since July of the previous year. In the realm of macroeconomics, a series of Eurozone confidence indexes along with the German Harmonized Index of Consumer Prices are likely to attract attention during the European session.
The attention in the US will be directed towards the speech of Federal Reserve Chairman Jerome Powell at Harvard University. The EUR/USD is currently positioned at 1.1517, exhibiting a slight bearish sentiment in the near term following its recent breach of the lower boundary of the ascending channel last week. The 4-hour Moving Average Convergence Divergence histogram has shifted into negative territory, with the line positioned beneath the signal line and both below zero, suggesting a strengthening downside momentum. Meanwhile, the Relative Strength Index hovering around 43 remains below the 50 midline, signifying that sellers maintain dominance, albeit without reaching oversold levels.
Currently, the March 23 low, positioned at 1.1484, is effectively containing bearish movements, thereby obstructing the route to the March 18 and 19 lows around 1.1444. Bulls may face resistance at the reverse trendline, currently near 1.1555, as well as at the March 26 high, around the 1.1575 region. A surprising confirmation above this level would reveal last week’s peaks around 1.1635.