EUR/USD maintains a favorable position near 1.1450 during the Asian session on Monday. The pair maintains a bearish sentiment beneath the significant 100-day EMA, indicating that the most likely direction is downward, supported by an oversold RSI momentum. The primary resistance level to monitor is 1.1510, while the first support level appears at 1.1415. The EUR/USD pair shows signs of recovery, approaching the 1.1450 level during the Asian trading session on Monday. Nonetheless, the potential upside for the major pair might be limited, as escalating conflict in the Middle East could bolster safe-haven currencies like the US Dollar against the Euro.
Over the weekend, US President Donald Trump asserted that “many countries” would dispatch warships to the region, subsequently calling on several nations to take action. Trump indicated that NATO is headed for a “very bad” future if US allies do not contribute to the efforts in opening the Strait of Hormuz. Market participants prepare for the upcoming interest rate decisions from the US Federal Reserve and the European Central Bank later this week. The Federal Reserve is anticipated to maintain interest rates within the range of 3.50% to 3.75% on Wednesday. However, concerns regarding inflation driven by energy prices are tempering expectations for potential rate reductions in the future.
Swaps pricing suggests that market participants anticipate the ECB will accelerate its monetary policy tightening more swiftly than earlier projections indicated. The expectation is for the ECB to implement a rate hike as early as June, based on LSEG data. In the daily chart, the near-term outlook for EUR/USD remains negative as the price stays significantly below the 100-day exponential moving average, which has begun to level off following a previous peak. Additionally, the price has dipped below the lower Bollinger Band in recent sessions and is currently moving along the lower edge of the envelope. The RSI remains in oversold territory following a decline from mid-range levels, indicating significant downside momentum and implying that sellers continue to dominate, despite the pair trading well below its 20-day Bollinger midpoint around 1.1700.
Initial resistance is observed at 1.1510, the most recent recovery high, with stronger supply anticipated around 1.1620, where the 20-day Bollinger middle band and the 100-day EMA converge, creating a potential barrier. On the downside, immediate support is positioned at 1.1415, the recent closing low, with a breach revealing the subsequent bearish target around 1.1360, based on the continuation along the current lower Bollinger Band trajectory. While EUR/USD stays constrained beneath 1.1620, any upward movements are likely to draw selling pressure, maintaining attention on lower support levels.