EUR/USD has declined to session lows at 1.1775, moving down from highs that exceeded 1.1800 on Tuesday. In February, Eurozone Industrial Production surpassed expectations. The prospect of renewed US-Iran negotiations continues to place downward pressure on the safe haven US Dollar. The Euro experiences a decline against the US Dollar on Wednesday, marking the first decrease in the past eight days. The pair is currently trading at 1.1785, following a rise to new six-week highs exceeding 1.1810 on Tuesday. Market participants have largely overlooked the positive Eurozone Industrial Production figures, while optimism surrounding potential new peace negotiations between the US and Iran is helping to maintain the Euro’s stability close to its recent peaks.
Data released by Eurostat earlier on Wednesday indicated that factory output increased by 0.4% in February, recovering from a 0.8% decline in January and surpassing market expectations of a 0.3% gain. The market, however, seemed largely indifferent to these figures, as they do not account for the ramifications of the conflict in Iran. Amid the ongoing situation in the Middle East, US President Donald Trump has increased risk appetite on Tuesday, stating in an interview with the New York Post that peace talks could potentially recommence in Islamabad within the next two days. Iranian authorities have remained silent on the issue; however, United Nations Secretary-General António Guterres has indicated that it is “very probable” that discussions will recommence this week.
In the meantime, the US military has declared that the blockade in the Strait of Hormuz is now “fully implemented”. This measure effectively halts Iran’s maritime commerce, which, as stated by the US Central Command, constitutes approximately 90% of the nation’s economy. This action intensifies pressure on the Islamic Republic to reach an agreement, while simultaneously exacerbating the constraints on global oil supply. On Tuesday, European Central Bank President Christine Lagarde indicated that the region’s economy has fluctuated between the ECB’s baseline and adverse scenarios. However, she did not commit to any specific data regarding future rate hikes and upheld her data-dependent approach. In the US, March Producer Price Index figures indicated that prices at factory gates increased to a 4% year-on-year rate, up from 3.4% in February, yet falling short of the 4.6% reading expected by the market. The core PPI, excluding food and energy, increased at a consistent yearly rate of 3.8%, which is below the anticipated 4.2%.
EUR/USD exhibits a positive bullish sentiment as it remains firmly positioned close to six-week highs. The Relative Strength Index on the four-hour chart remains in positive territory; however, the Moving Average Convergence Divergence histogram has shifted to negative, indicating a decline in bullish momentum. On the topside, initial resistance is positioned at 1.1825, which effectively contained bullish movements on February 26 and 27. Further up, the next target is the highs from February 9, 10, and 11, approximately 1.1930. On the downside, attempts to decline remain limited above the 1.1780 level for the time being, keeping the route towards prior peaks, around the 1.1720-1.1730 range, in sight, ahead of the lows from April 8 and 9, close to 1.1650.