EUR/USD Extends Gains As Dollar Slides To Fresh Six-Week Lows Now

EUR/USD extended its gains on Monday as market mood improved, weighing on the US Dollar, which fell to six-week lows near 98.36 according to the US Dollar Index (DXY). At the time of writing, the pair trades at 1.1757, up 0.32%.

Euro draws support from firmer sentiment and renewed truce hopes

Sentiment has improved, and is a tailwind for the single currency, which seems poised to test the 1.1800 figure in the near term. The two-week ceasefire seems fragile, as the US and Iran could return to negotiations following a not-so-productive meeting last Saturday.

Negotiations in Pakistan lasted 21 hours, and despite achieving some progress, Iran was reluctant to abandon its nuclear program and control of the Strait of Hormuz. The White House retaliated by imposing a blockade in the Strait of Hormuz, as tensions escalated between the two sides.

Recently, the US President Donald Trump said that Tehran wants to make a deal, as a report by the New York Post suggested that Iran was studying halting the Uranium enrichment program, as a US condition for ending the war.

The EUR/USD jumped after the news, while the US dollar weakened to a six-week low, according to the US Dollar Index (DXY). The DXY, which tracks the performance of the buck’s value against six currencies, is down 0.29% at 98.36.

Data in the US has taken the driver’s seat, unless it’s inflation-related. Existing Home Sales fell to a nine-month low of 3.98 million in March, down 3.6% MoM.

Across the pond, elections in Hungary are also driving the Euro higher, as the winner, Peter Magyar, promised to restore democratic standards in the country following a landslide victory over the outgoing Prime Minister Viktor Orban, who had been in power for 16 years.

The Vice President of the European Central Bank (ECB), Luis de Guindos, said the impact of the conflict in the Middle East will depend on its duration. ECB’s Vujcic commented that energy prices remain within the ECB’s baseline scenario.

Traders’ eyes will be on the Producer Price Index (PPI) for March, along with the ADP Employment Change 4-week average and a slew of Fed speakers. In Europe, speeches by ECB’s Chief Economist Philip Lane —twice — and Mario Cipollone would cross the wires.

EUR/USD Price Analysis: Technical outlook

In the daily chart, EUR/USD trades at 1.1758. The pair holds above the triple simple moving average cluster at 1.1674, keeping the near-term bias tilted to the upside as recent price action rides an ascending sequence of higher closes. The Relative Strength Index (14) at 62.6 leans toward bullish but not yet overbought territory, suggesting buyers retain control while leaving room for further gains before conditions turn stretched.

On the downside, initial support is found at the 1.17 area, reinforced by the 50/100/200-day simple moving averages converging around 1.1674. A deeper pullback would expose former resistance-turned-support near 1.1536, ahead of stronger structural backing around 1.1488, where the prior rising trend line was broken.