EUR/USD Forms Inside Day After Hitting New Lows
Geopolitical pressure and mixed economic signals kept EUR/USD under pressure today as Eurozone inflation surprises and U.S. macro strength complicated the ECB’s policy outlook.
EUR/USD traded higher on Wednesday as the U.S. Dollar lost safe haven appeal thanks to the perception of subsiding geopolitical tensions; the U.S.-Israel war against Iran could be short-lived. Recent U.S. economic data, including stronger private sector employment and resilience in services activity, have supported the greenback and may be limiting upside for the Euro. Broader market volatility tied to Middle East developments are keeping risk sentiment fragile, only allowing for a modest pullback by the U.S. Dollar.
Domestic Eurozone fundamentals were mixed throughout the morning: headline inflation rebounded more than expected in February and services PMI showed modest expansion, but uneven growth across major economies and rising input costs added to uncertainty. These conflicting signals leave the European Central Bank in a delicate position, balancing elevated energy driven price pressures against slower underlying growth as markets weigh near term policy prospects in both the U.S. and Eurozone.
EUR/USD Daily Price History
In the above chart, EUR/USD rates are finding support at the confluence of two key technical levels: the January 2026 swing low; and the uptrend from the August and November 2025 swing lows. While the market overshot this area just below 1.1600 during yesterday’s session, the close north of 1.1600 and the subsequent inside day candle forming today suggest that the selling may have run its course in the short-term. To this end, there is a noted bullish divergence in Slow Stochastics, which failed to drop into oversold territory. A meaningful rebound in EUR/USD would have implications for broader risk appetite in FX, given the Euro’s sensitivity to gas disruptions stemming from the U.S.-Israel war against Iran.
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