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Facts:
- EUR/USD is trading at 1.18 12:30 PM GMT on Tuesday, April 14, one hour ahead of the U.S March PPI release
- The pair has managed to break above both the 200- and 100-session exponential moving averages (EMA200 and EMA100)
- The daily RSI is above 65, while MACD remains supportive, and the pair is trading near the 61.8% Fibonacci retracement of the downtrend that began on January 27
Recommendation:
- Position: Short EUR/USD at market price
- Take Profit: 1.16646
- Stop Loss: 1.18881
View:
From a technical perspective, EUR/USD has re-entered an upward trend, but the rebound—driven by growing optimism around a potential resolution of the U.S.–Iran conflict—has been unusually sharp. At the same time, conditions in global energy markets—on which Europe is more dependent than the U.S remain challenging. IEA President Fatih Birol indicated that normalization of supply from the Middle East could take up to two years due to the scale of infrastructure damage. As a result, the 61.8% Fibonacci retracement of the late-January downtrend, further reinforced by prior price reactions (February consolidation), may act as a significant resistance level for EUR/USD. Uncertainty surrounding the Strait of Hormuz is likely to persist, with Iran maintaining that the U.S. will not control this key trade route. In an escalation scenario, sentiment toward EUR/USD may gradually weaken, and even if the conflict ultimately resolves favorably for Europe, the pair could experience elevated volatility along the way. Also, multiple US macro data signals that price pressure is starting to rise across the economy, which may lead to still quite ‘hawkish’ Fed stance ahead of the summer. Technically, the daily RSI has risen to 65, while the hourly RSI stands at 79.1—both suggesting overbought conditions. Given this setup, a short position is favored, targeting 1.16646 with a protective stop at 1.18881. M
Source: xStation5
