EURUSD is showing mixed signals as investors stay cautious

The euro continues to lose ground against the US dollar during the early European session on Tuesday amid profit-taking and a brief rebound in the greenback. At the same time, Investors remain cautious amid escalating US-Iran tensions ahead of today’s looming ceasefire expiry. While this may signal a pause in the euro’s recent uptrend, the lack of immediate follow-through does not necessarily indicate that bullish momentum is fading.

Weak Economic Sentiment Adds to Caution

German investor sentiment has fallen to its lowest point since 2022, driven by escalating concerns regarding the conflict in Iran. The Economic Sentiment Index plummeted to -17.2 in April, far below the anticipated -5. Likewise, the ZEW Economic Sentiment for the Eurozone decreased to -20.4, considerably missing the expected -14.0.

Looking ahead, the EU economic calendar is relatively quiet for the rest of the week. As a result, movements in the US dollar, geopolitical developments, and central bank policymakers’ remarks are likely to have a major impact on the EUR/USD pair. On the data front, the main highlight for the euro this week will be the PMI data from Germany and the Eurozone, scheduled for Thursday.

EURUSD Technical Outlook

The recent price action signals suggest that the bullish trend remains intact in the medium term. However, in the short term, a significant resistance level persists at 1.1850, a critical level that could affect near-term price movements. A successful breakout above this level, which would confirm a continuation of the current uptrend, potentially targeting 1.1900 to 1.1930. Conversely, failure to hold above this resistance may lead to a short-term pullback, with immediate support near 1.1730 and major support around 1.1690 to 1.1680.

Summary: Technically, the medium-term outlook for the euro remains positive. However, if the US dollar strengthens this week, the euro could face further short-term weakness.

 

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