EUR/USD gains as ceasefire hopes undermine US Dollar

The EUR/USD pair is trading near the 1.1570 price zone on Monday as the US Dollar (USD) loses momentum amid relative easing concerns about the Iran war.

The Greenback is no longer benefiting from safe-haven flows in the second half of the American session, as growing ceasefire hopes in the Middle East are offsetting earlier risk-off demand. Diplomatic efforts reportedly involving regional intermediaries have helped calm markets, reducing the urgency to seek safety in the USD.

Over the weekend, United States (US) President Donald Trump maintained a hardline stance, warning that failure to reopen the Strait of Hormuz would have severe consequences. He threatened to destroy Iran’s power plants and bridges if the Strait is not reopened by the deadline he set on Tuesday.

At the same time, recent developments suggest that hopes for a ceasefire are emerging, which have somewhat softened the impact of Washington’s ultimatum. Reports indicate that diplomatic channels potentially involving regional intermediaries are being explored to stabilize the situation and ensure the passage of maritime traffic through the Strait. This has helped cap further upside in USD, preventing a more aggressive move lower in EUR/USD.

Finally, the Institute for Supply Management (ISM) reported that the Services Purchasing Managers Index (PMI) eased to 54 in March from 56.1 in February, coming in short of expectations of 55 and putting additional pressure on the USD.

Short-term technical analysis:

On the 4-hour chart, EUR/USD trades at 1.1555. The near-term bias is mildly bullish as price holds above the 20-period Simple Moving Average (SMA) and challenges the 100-period SMA cluster, signaling improving demand after the recent consolidation. The 20-period SMA has turned higher above 1.1540, while the flatter 100-period SMA just below the spot rate offers a nearby pivot, reinforcing a developing upward tilt rather than a clear trend. The Relative Strength Index (RSI) near 54 stays above the 50 midline, indicating modest positive momentum that supports a grind higher rather than impulsive upside.

Immediate support emerges at 1.1538, where prior horizontal support aligns close to the 100-period SMA, and a break below this area would expose the next supports at 1.1518 and 1.1506. As long as the pair holds above 1.1538, buyers retain the advantage and can keep pressure on initial resistance at 1.1571. A sustained move above 1.1571 would open the way toward higher levels, while failure to clear this barrier followed by a drop through 1.1538 would shift the focus back to the lower supports and neutralize the current bullish bias.

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