EUR/USD Price Forecast: War and Oil continue to support the US Dollar

EUR/USD Current price: 1.1581

• Financial markets continue to gyrate around war and oil headlines.
• The US Consumer Price Index came in as expected at 2.4% YoY in February.
• EUR/USD grinds lower, risks piercing the 1.1500 mark on risk aversion.

The EUR/USD pair traded with a soft tone throughout the first half of the day, holding within familiar levels. The Middle East war continues, with back-and-forth attacks and the US Dollar (USD) benefiting from persistent uncertainty.

On the war front, news revolve around Oil emergency reserves and whether they would be released and when. On Tuesday, the International Energy Agency (IEA) proposed the release of 300-400 billion barrels, although the G7 had not decided on it yet. Nevertheless, Japanese Prime Minister Sanae Takaichi said the country will start releasing part of its oil reserves as early as next week to curb gasoline prices to an average of 170 yen per litre. Oil prices barely remain contained, with West Texas intermediate (WTI) hovering around $85.

Meanwhile, European authorities expressed their concerns about the war's impact on the Old Continent. EU Commission President Ursula von der Leyen reports that Europe's reliance on fossil fuels has resulted in an additional €3 billion in costs within the first ten days of the  Iran war.  Also, European Central Bank (ECB) officials started acknowledging interest rates could go higher as a consequence of the Iran war.

The USD retained its strength after the release of the United States (US) Consumer Price Index (CPI). February inflation came in pretty much as expected, according to the CPI report. Inflation remained unchanged at 2.4% on a yearly basis, while the monthly CPI rose 0.3% following the 0.2% increase recorded in January. The core annual CPI was confirmed at 2.5%, matching expectations and the January reading.

EUR/USD short-term technical outlook

According to the 4-hour chart, EURUSD is mildly bearish as the pair holds below the 20-period Simple Moving Average (SMA) near 1.1601 and far beneath the declining 100- and 200-period SMAs clustered above 1.17, keeping the broader trend under downside pressure. The Momentum indicator turned lower, slipping back toward the zero line after a brief positive stretch, while the Relative Strength Index (RSI) retreats from the 50 area toward the mid-40s, indicating fading recovery attempts rather than fresh buying interest.

Immediate resistance emerges at the 20-period SMA around 1.1600, with a break higher exposing 1.1630 and then the 1.1660 area, where prior highs align with the descending medium-term averages to form a stronger cap. On the downside, first support stands at 1.1560, ahead of 1.1530 as the next bearish objective if sellers extend control. A sustained move below the latter would open the way toward the 1.1470 region, a long-term static support area.

In the daily chart, EUR/USD is also biased lower as spot holds well below the 20-day and 100-day Simple Moving Averages (SMAs), which cap recovery attempts around 1.17, while price also trades below the slowly rising 200-day SMA near 1.17. The 14-day Relative RSI hovers in the low-30s, reinforcing prevailing selling pressure without yet signaling an extreme oversold condition. Finally, the Momentum indicator remains below its midline and drifting lower, indicating that downside forces still dominate EUR/USD.

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