EUR/USD Price Forecast: US Dollar less attractive on risk aversion shock

EUR/USD Current price: 1.1482

• Iran’s war development pushed Oil prices higher, but risk aversion did not benefit the Greenback.
• The Federal Reserve and the European Central Bank will announce their decisions this week.
• EUR/USD is mildly bearish in the near term, sellers await around 1.1500.

The EUR/USD pair trades with a positive tone on Monday, having trimmed most of Friday’s losses, despite Iran’s war escalating over the weekend, triggering fresh inflation-related concerns ahead of central banks’ monetary policy decisions.

The US Dollar (USD) gapped modestly lower at the weekly opening, despite soaring oil prices. The barrel of West Texas Intermediate (WTI) hovered around $100 at the weekly opening, following weekly developments. On Saturday, the United States (US) launched a massive strike on Iran’s Kharg Island, the country’s main oil hub. Crossfire continued throughout the weekend, while US President Donald Trump called for an alliance to protect and reopen the Strait of Hormuz, but ended up demanding their help after different nations announced they were not planning to send ships to the region.

Meanwhile, most major central banks’ decisions will be out this week. The Federal Reserve (Fed) is scheduled to make its announcement on Wednesday, while the European Central Bank (ECB). Interest rates in both cases are expected to remain unchanged, with the focus on Chairman Jerome Powell and President Christine Lagarde’s words, respectively.

Data-wise, the EU did not release relevant data, while the US has nothing relevant to offer. Still, the country will publish February Capacity Utilization and Industrial Production for the same month.

EUR/USD short-term technical outlook

In the 4-hour chart, EUR/USD is mildly bearish as the pair holds below the falling 20-period and 100-period Simple Moving Averages (SMAs), which in turn lie well beneath the declining 200-period SMA, underscoring a dominant downside context. Price action has been carving out lower highs and lower lows from the 1.1600 area, while the Momentum indicator remains below its midline with a negative tilt, signaling persistent selling pressure despite some recent deceleration. Finally, the Relative Strength Index (RSI) indicator has recovered from oversold territory but stabilizes around 44, in line with limited buying interest.

Initial resistance emerges near 1.1520, close to the latest 20-period SMA around 1.1500, with a break above exposing 1.1600 as the next upside hurdle. On the downside, immediate support aligns with the recent low at 1.1420, followed by 1.1360 if sellers extend control. As long as the pair trades beneath the 1.1600 region and the cluster of medium- and long-term SMAs, rallies are expected to attract selling interest and keep the broader focus tilted toward the downside.

Technical readings in the daily chart, EUR/USD, support the bearish case. Spot holds below a sharply bearish 20-day SMA, which aims to break below directionless 100- and 200-day SMAs clustered around 1.17. Technical indicators ticked marginally higher but remain near oversold readings and with limited upward strength, reflecting the ongoing recovery rather than hinting at additional gains ahead.

(The technical analysis of this story was written with the help of an AI tool.)