EURUSD stuck in a very tight range ahead of the ECB meeting

EURUSD continues to struggle with direction, remaining confined within a narrow range ahead of the upcoming European Central Bank (ECB) meeting. On Thursday, the pair experienced a slight rebound during the early European session after hitting a fresh weekly low. However, the market structure has shifted from bullish to neutral-to-bearish in the short term.

EUR/USD retreats amid Middle East tensions boosting the dollar

The pair pulled back from session highs amid rising uncertainty over cease-fire talks in the Middle East, following US President Trump's warning of potential strikes on Iranian infrastructure if shipping through the Strait of Hormuz is threatened. Heightened geopolitical tensions supported the US dollar, while oil prices climbed for a third consecutive session, increasing demand for safe-haven assets.

Market focus on ECB rate decision

Investor attention is firmly fixed on today’s ECB rate decision, a pivotal event expected to influence the euro’s short-term direction. The ECB is scheduled to announce its decision at 12:15 PM GMT, followed by a press conference at 12:45 PM GMT. Market participants are keenly awaiting any indications from ECB President Lagarde regarding the timing and likelihood of interest rate hikes. While the consensus expects rates to remain steady at 2.25%, recent escalations in US-Iranian tensions near the Strait of Hormuz have pushed oil prices to a one-month high, potentially supporting a more hawkish ECB stance.

EURUSD Short-term Technical Outlook

Technically, the pair is consolidating above the key support level of 1.1400. The Relative Strength Index (RSI) has recovered from oversold territory and currently hovers in the mid-range, indicating moderate momentum improvement. Despite positive gains during the Asian session, overall momentum remains mixed. Should bearish sentiment persist, a failure to hold the 1.1400–1.1390 support zone could result in further declines toward 1.1360/50. Conversely, a break above the 1.1450 resistance level could prompt gains toward last week’s high near 1.1480.

In-depth technical analysis suggests that any upward movements may represent temporary rallies, potentially offering better entry points to short the euro. For a sustained upward trend, the pair would need to establish itself above the critical 1.1600 level.

 

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