Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1650.
Add a stop-loss at 1.1850.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1850.
Add a stop-loss at 1.1650.
The EUR/USD pair retreated slightly below the psychological level of 1.1800 as focus remained on the rising tensions between the US and Iran. If dropped to 1.1765, down sharply from this month's high of 1.1850.
US and Iran Tensions Escalated
The EUR/USD pair pulled back as the tensions between the US and Iran continued. In a statement, Iran said that it had shut the Strait of Hormuz down, a move that will lead to higher crude oil and energy prices.
Iran attributed the closure to the fact that the US had not lived to its terms. This happened as Trump insisted that the blockade would remain against Iranian ships.
According to the Wall Street Journal, the US military is considering boarding some of the Iranian ships in sea, a move that will lead to more escalation.
The EUR/USD exchange rate will next react to the upcoming statement by Christine Lagarde, the head of the European Central Bank (ECB). In her statement last week, she said that the war had impacted the economy and maintained that officials were still considering what to do in the next meetings.
The pair will next react to the upcoming US retail sales and pending home sales reports on Tuesday this week. Economists expect the data to show that the country’s retail sales slowed to 2.4% from the previous month's 3.7%.
The pair will also react to the upcoming pending home sales report, which is expected to show that sales rose by 0.7% in March. Economists believe that the Federal Reserve will maintain interest rates unchanged in its next week’s meeting.
EUR/USD Technical Analysis
The EUR/USD pair has been in an upward trend after bottoming at 1.1410, its lowest level on March 13. It reached a high of 1.1850 last week and then pulled back as geopolitical tensions rose.
The pair has remained above the important support level at 1.1640, the neckline of the double-bottom pattern. It has remained above the Supertrend indicator and the 50-day Exponential Moving Average (EMA).
Therefore, the pair may continue falling, potentially to the key support level at 1650. A move above this month’s high of 1.1850 will invalidate the bearish outlook.