The EUR/USD currency pair weakened during the European trading session on Monday, falling 0.3% to near 1.1535, as the US Dollar (USD) strengthened amid escalating conflicts in the Middle East involving the United States, Israel, and Iran [1]. The US Dollar Index (DXY), which measures the Greenback against six major currencies, rose 0.35% to approximately 99.90, reflecting increased demand for safe-haven assets due to heightened geopolitical risks [1]. Iran has vowed to indefinitely close the Strait of Hormuz and has attacked regional infrastructure belonging to the US and Israel, in response to US President Donald Trump's 48-hour ultimatum demanding the reopening of Hormuz. Over the weekend, President Trump threatened attacks on Tehran's power plants via a post on Truth.Social if Iran does not comply within the specified timeframe [1].
The Euro (EUR) traded lower as surging energy prices in the Eurozone are expected to reduce households' purchasing power, adding further pressure to the currency [1]. On the monetary policy front, Goldman Sachs anticipates that the European Central Bank (ECB) will raise interest rates in both the April and June policy meetings, although the ECB left rates unchanged last week [1].
From a technical perspective, EUR/USD remains bearish, trading below the descending 20-day Exponential Moving Average (EMA) at around 1.1600, which is acting as dynamic resistance following a breakdown from the mid-1.16 area [1]. The price action has established a sequence of lower highs and lower closes from the 1.18 zone, with the Relative Strength Index (RSI) at 42, confirming persistent downside momentum [1]. Immediate resistance is seen at the 20-day EMA, followed by the March 10 high of 1.1667. A daily close above this level would be required to challenge the broader bearish structure. On the downside, support is at 1.1500, guarding the recent low at 1.1415; a break below 1.1415 could open the way toward the 1.1350 region as the next bearish target [1].
CONCLUSION
EUR/USD is under significant pressure due to escalating Middle East tensions and rising energy prices in the Eurozone, with the US Dollar benefiting from safe-haven flows. Technical indicators and analyst expectations point to further downside risk, especially if geopolitical risks persist and the ECB moves forward with anticipated rate hikes. Market participants should closely monitor developments in the Middle East and upcoming ECB policy decisions for further direction.