EUR – Euro on the defensive, focused on the prospects of US-Iran negotiations

Geopolitical factors continue to dominate market sentiment, with investors closely watching the US-Iran ceasefire agreement expiring on April 22. A breakdown in negotiations could push oil prices and the dollar higher in tandem, putting further pressure on European currencies due to the European economy's heavy reliance on energy imports.

In Europe, data released Monday showed that Germany's March Producer Price Index (PPI) rose 2.5% month-on-month, the highest level since August 2022, confirming the upside inflationary risks from the Iran war. This data, following strong wholesale prices and higher consumer price indices (CPI) in other EU countries last week, increases pressure on the European Central Bank to raise interest rates in the coming months.

From a medium-term perspective, the euro/dollar exchange rate has broken through a descending trendline and surpassed the neckline of a double bottom at 1.1640. If it can continue to hold above this level, the euro is expected to move higher in a double bottom pattern. However, in the short term, the 1.18 level may be facing significant resistance. The charts also show that the RSI and Stochastic Oscillator, after consolidating in a high range for several days, have now slightly retreated, suggesting that further upward momentum may be limited. Near-term resistance levels are seen at 1.1820 and 1.1930, with the next levels expected to be 1.20 and 1.2080. Support levels are seen at 1.1650 and 1.1580, with the next level expected to be 1.1520. Key support points to the 1.14 level, which the euro tested last July, holding for three days before gradually stabilizing. It also held this level temporarily in mid-March.

Estimated Trading Range:

Resistance: 1.1820 - 1.1930 - 1.2000 – 1.2080

Support: 1.1650 - 1.1580 – 1.1520 - 1.1400**

Key Focus:
Tuesday
Germany ZEW April Economic Sentiment Index (17:00)

Wednesday
Eurozone April Consumer Confidence Index (22:00)

Thursday
Eurozone April PMI (16:00)

Friday
Germany IFO April Business Climate Index (16:00)

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