EUR/USD experiences a decline for the fourth straight day on Friday, approaching the 1.1500 level. The diminishing expectations for a rapid resolution to the Iran conflict continue to exert pressure on the Euro. The price action has breached the lower boundary of the upward channel, indicating a potential continuation of the downtrend. The Euro is trading lower against the US Dollar for the fourth consecutive day on Friday, changing hands at 1.1520 at the time of writing, down from weekly highs of 1.1640 on Monday. The impact of elevated oil prices on the Eurozone economy, combined with diminishing expectations for a rapid resolution to the Iran conflict, is serving as a barrier to any substantial recovery of the Euro.
US President Donald Trump offered a glimmer of optimism on Thursday by prolonging the deadlines for potential actions against Iran’s energy infrastructure until April. Market enthusiasm, however, was fleeting, as the source indicated that the Pentagon is contemplating the deployment of 10,000 additional troops for a ground offensive, which would prolong the conflict and maintain the closure of the Strait of Hormuz for an extended duration.
In Europe, preliminary Consumer Prices Index data from Spain indicated that price pressures increased to 3.3% year-on-year in March, reaching their highest level in nearly two years, up from 2.3% in February. This development offers additional justification for the European Central Bank to consider raising interest rates in April. The EUR/USD is currently positioned at 1.1521, reflecting a slightly bearish near-term outlook. The pair has dipped below the lower limit of the ascending channel, with price movements now situated beneath both the channel base, approximately 1.1540, and the adjacent horizontal resistance at 1.1575.
The Moving Average Convergence Divergence line has turned negative and remains below its signal, while the Relative Strength Index holds in the low-40s, collectively reinforcing the development of downside momentum within an overarching upward structure. Bears continue to be held within the range of 1.1520, with the March 23 low at 1.1484 in focus, as we look ahead to the March 18 and 19 lows around 1.1440. On the positive side, the noted 1.1539 reverse trendline and the 1.1575 intraday level are narrowing the route towards the weekly peaks around 1.1640.