As US-Iran tensions and a 10% oil price surge drive safe-haven demand for the USD, the EUR/USD pair has retreated to a critical technical inflection zone. Navigating geopolitical headwinds and central bank policy shifts for the euro, from here. Key levels to watch.
Chart of the week – EUR/USD potential bullish reversal above moving averages
Key takeaways
- Pullback driven by geopolitics, but reversal zone reached: EUR/USD fell 1.5% from its recent high amid US–Iran tensions and stronger USD demand, but the decline has stalled at a key support confluence, signaling a potential turning point.
- Macro backdrop turning euro-supportive: A steepening Eurozone–US rate spread suggests the ECB may be relatively more hawkish than the Fed, providing a fundamental tailwind for EUR/USD.
- Technical conditions favour bullish reversal: Price is holding above major moving averages with a bullish crossover and improving momentum; resistance zone at 1.1835–1.1910, while a break below 1.1620 negates the bullish outlook.
EUR/USD peaked at a two-month high of 1.1849 on 17 April 2026 before reversing lower, slipping 1.5% to 1.1669 by 23 April as the second round of US–Iran peace talks stalled.
Renewed tensions and visible cracks in the ceasefire, marked by both sides disrupting tanker movements in the Strait of Hormuz, triggered a rebound of over 10% in oil prices, boosting near-term safe-haven demand for the US dollar.
Despite this pullback, the pair’s five-day decline has brought it into a key inflection zone, where technical and intermarket conditions point to the potential for a bullish reversal.
Let’s uncover these factors in greater detail and note that two distinctive risk events occurring this week are likely to have a potentially significant impact on the movement of the EUR/USD: the outcome of Fed and ECB monetary policy decisions and guidance on Wednesday, 29 April 2026, and Thursday, 30 April 2026, respectively.
Eurozone/US implied interest rate policy curve spread has steepened
Fig. 1: Eurozone-US implied interest rate policy curve spread as of 24 Apr 2026 (Source: MacroMicro).
The monthly implied future policy interest rate curves for the Eurozone and the US are calculated using short-term interest rate futures that are highly sensitive to the expectations on these countries’ central banks' monetary policies
The current Eurozone/US implied interest rate policy curve spread for the period from May 2026 to September 2026 has steepened from three months ago, with the current September 2026 reading standing at -1.18% compared to -1.37% three months ago (see Fig. 1).
These observations suggest that the ECB is likely to be less dovish or more hawkish than the Fed, which in turn could provide support for a potentially firmer EUR/USD.
Rebounded from 20-day, 50-day, and 200-day moving averages
Fig. 2: EUR/USD medium-term trend as of 27 Apr 2026 (Source: TradingView).
The 1.5% minor corrective pull-back seen on the EUR/USD from its 17 April 2026 high of 1.1849 may have reached a key inflection area on Thursday, 23 April 2026.
The corrective pull-back stalled at the 20-day, 50-day, and 200-day moving averages that confluence with an intermediate support at around 1.1664.
In addition, the 20-day moving average flashed out a bullish crossover condition above its 50-day moving average on Friday, 24 April 2026, coupled with the 4-hour RSI momentum indicator, which rebounded from its support, and it has just crossed above the 50 level at this time of writing (see Fig. 2).
These observations suggest a potential medium-term bullish reversal for EUR/USD. Watch the 1.1620 key medium-term pivotal support for the next medium-term resistances to come in at 1.1835 and 1.1910 (also a Fibonacci extension cluster).
On the other hand, a break and a daily close below 1.1620 invalidates the bullish reversal scenario for a potential corrective decline extension to expose the next medium-term support at 1.1535/1510.
The information presented is historical information, and past performance is not indicative of future performance.
