EUR/USD Holds Above Key Moving Averages as Bulls Eye 1.1900 Resistance in Next Technical Test

Summary:

EUR/USD inches above 1.1790 during Friday's European session as Dollar selling persists on moderate Iran peace optimism, though gains remain capped below Thursday's 1.1825 highs.

Buy EURUSD

EXP

Trading

1.17749

ENTRY

1.19200

TGT

1.17300

1.17633 -0.00182 -0.15%

Point

Flat

1.17300

CLOSING

1.17749

ENTRY

1.19200

TGT

The Euro is edging cautiously higher against the US Dollar during Friday's European session, nudging above the 1.1790 level after recovering from session lows at 1.1770 — a move that, on its surface, suggests a currency finding its footing after days of volatile, geopolitically driven price action. But look beneath the headline number, and the picture that emerges is considerably more complicated, considerably more fragile, and — if the latest diplomatic reporting from Reuters is to be believed — potentially on the verge of a rude awakening that could reverse the Euro's tentative gains with considerable speed.

At time of writing, EUR/USD trades in the vicinity of 1.1790, holding above the session low but remaining firmly below Thursday's intraday high of 1.1825. The range-bound, hesitant character of Friday's price action speaks volumes about the state of market conviction right now — this is not the behavior of a currency pair with clear directional momentum. It is the behavior of a market waiting for information, processing contradictory signals, and unwilling to commit to a sustained move in either direction until the geopolitical fog begins to lift.

The primary driver behind EUR/USD's modest Friday advance is the continued, broad-based weakness of the US Dollar, which has now been under selling pressure for an extended period as traders systematically reduce their safe-haven Dollar holdings in response to shifting perceptions of geopolitical risk. The narrative that drove aggressive Dollar buying in the early stages of the Middle East conflict — a flight to safety as oil prices surged, shipping routes were threatened, and the prospect of a wider regional war loomed large — has been gradually eroded by a series of diplomatic developments that, taken together, have softened the acute edge of market fear even if they have not eliminated the underlying uncertainty.

Israel's announcement on Thursday of a ten-day ceasefire in Lebanon was interpreted by markets as a meaningful confidence-building gesture, suggesting that at least one front in the broader regional conflict is moving toward de-escalation. More significantly for Dollar sentiment, US President Donald Trump confirmed publicly that Washington and Tehran could resume peace talks as early as this weekend — a statement that carries substantial market weight given Trump's track record of using public declarations to signal genuine diplomatic intent, however unconventional his negotiating style may be.

The cumulative effect of these developments has been to chip away at the Dollar's geopolitical risk premium — the extra demand for the Greenback that is generated purely by investors seeking shelter from global uncertainty. As that premium deflates, even modestly, the Dollar gives ground across the board, and EUR/USD is among the beneficiaries. The pair has recovered from levels that, at the height of the geopolitical panic, many analysts had feared could test the 1.1500 region, and the recovery above 1.1790 represents a meaningful technical stabilization even if the fundamental underpinnings of that move remain contested.

But I want to be clear about something that I think the market is not fully pricing: the Dollar's weakness in this environment is not a verdict on the US economy. It is a verdict on risk appetite. And risk appetite, as we have learned repeatedly in recent weeks, can reverse within hours on a single headline.

The most significant piece of news to cross the wires on Friday morning — and the one I believe deserves far more attention than the headline EUR/USD move would suggest — is a Reuters report citing Iranian sources that reveals a sobering reality about this weekend's planned diplomatic talks. According to the report, US and Iranian negotiators have substantially scaled back their ambitions for the upcoming discussions and are now seeking nothing more ambitious than a temporary memorandum aimed at preventing a return to open conflict — rather than the comprehensive framework agreement that markets had been beginning to price in.

This is a critical distinction, and I think the market has not yet fully digested its implications. There is an enormous difference between a credible, structured pathway toward a lasting nuclear and security agreement — the kind of deal that would genuinely remove the geopolitical risk premium from oil prices, reopen the Strait of Hormuz, and restore the pre-war trajectory of global energy markets — and a stopgap memorandum designed simply to prevent the situation from getting worse in the immediate term. The former would be genuinely transformative for European economic prospects. The latter is, at best, a temporary stay of execution that leaves the fundamental drivers of elevated energy prices entirely unresolved.

The nuclear issue, according to all available reporting, remains the central and most intractable sticking point in negotiations. Iran's position on uranium enrichment and its broader ballistic missile program are areas where the gap between Washington's demands and Tehran's red lines appears, as of now, unbridgeable in any short-term timeframe. A temporary memorandum that sidesteps these issues rather than resolving them is not a peace deal — it is a pause. And pauses, in the context of this conflict, have a troubling historical tendency to unravel at precisely the moment markets have become most complacent about them.

Compounding the diplomatic uncertainty is the continued closure of the Strait of Hormuz — arguably the single most consequential development for global energy markets since the conflict began. The Strait, through which a significant portion of global seaborne oil trade passes, remains effectively shut to normal commercial traffic, and WTI Crude Oil is currently trading more than 30% above its pre-war levels as a direct consequence. That is not a rounding error. That is a structural, supply-side energy shock of the first order — one that is reshaping cost structures, inflation trajectories, and growth forecasts across every major economy in the world.

For Europe specifically, the consequences of sustained elevated oil prices are particularly severe, given the Eurozone's deep structural dependence on crude oil imports. Unlike the United States, which has substantially increased its domestic energy production in recent years and has greater flexibility in managing supply disruptions, the Eurozone economies rely heavily on imported energy to power their industrial bases, heat homes, and fuel transportation networks. When global oil prices surge 30% and remain elevated, the transmission into Eurozone consumer prices is rapid, broad-based, and — critically — very difficult for the European Central Bank to manage through conventional monetary policy tools.

The March inflation data already told this story with uncomfortable clarity. Eurozone HICP headline inflation was revised higher to 2.6% year-on-year — the highest reading since July 2024 — driven primarily by the energy component, while core inflation actually edged slightly lower, confirming that the price pressure is supply-driven rather than demand-driven. This is the stagflation fingerprint: rising prices without the underlying economic momentum that would normally accompany them. And if oil prices remain at current levels — or worse, push higher — the ECB will face mounting pressure to raise rates into an economy that is already showing signs of significant weakness.

Let me be direct about something that I believe official commentary from both the ECB and European governments has been deliberately understating: the risk of Eurozone stagflation is real, it is rising, and it is the single greatest fundamental threat to the Euro's medium-term outlook. Stagflation — the toxic combination of stagnating economic growth and persistently elevated inflation — is the scenario that central banks fear most, because it creates a policy trap where every available tool makes at least one of the problems worse. Raising interest rates to combat inflation risks tipping a already-fragile economy into recession. Cutting rates to support growth risks entrenching inflationary expectations and losing hard-won credibility on price stability.

The Eurozone's economic fundamentals were already under pressure before the Middle East shock arrived. GDP growth was anaemic, consumer confidence was depressed, the labour market was loosening, and business investment was subdued. The energy price surge has now added a severe supply-side cost shock to those pre-existing vulnerabilities, compressing corporate margins, squeezing household real incomes, and further dampening the economic activity that was already struggling to gain momentum after the post-COVID adjustment period.

If the stagflation narrative gains further traction in the coming weeks — driven by more months of elevated energy prices, disappointing growth data, and an ECB that appears increasingly trapped between incompatible policy objectives — the Euro's current modest recovery will look, in retrospect, like a countertrend bounce within a more prolonged bearish trend rather than the beginning of a sustained upside move. The pair's failure to reclaim Thursday's 1.1825 high on Friday, despite continued Dollar weakness, is an early warning sign that EUR/USD upside may be more limited than the surface-level price action suggests.

Technical Analysis

EUR/USD remains entrenched within a powerfully bullish structure on the 2-hour chart, defined by one of the most visually compelling trend reversals visible across the major currency pairs in recent weeks. After a prolonged and orderly downtrend that carried price from the 1.1650 region all the way down toward the 1.1450–1.1500 support floor through late March and early April — guided by a well-defined descending trendline from the upper left of the chart — the pair staged a dramatic and high-velocity breakout around April 5–6 that has fundamentally rewritten the technical narrative for the Euro. That breakout, which sliced through the descending trendline with authority and accelerated sharply to the upside, has since produced a rally of approximately 400 pips from its base, and the structure that has developed in its wake is constructive, organized, and — critically — still intact.

Price currently trades at 1.17938, sitting in a zone of near-perfect convergence between the 9-period EMA at 1.17854 and the 21-period SMA at 1.17852. The clustering of both moving averages at essentially the same price level as the current market rate is a technically significant moment — it represents a pause in momentum rather than a reversal, a consolidation phase where the market is gathering energy for the next directional move rather than signaling exhaustion of the prevailing trend. The fact that price has held above both moving averages on a closing basis throughout the recent consolidation between April 14 and 17 is an encouraging sign for bulls. It suggests that dip-buyers are active at current levels and that sellers have not been able to establish the kind of sustained momentum below the moving average cluster that would signal a more serious correction.

The ascending trendline drawn from the April 5 breakout lows — which has guided the impulsive rally in a clean, disciplined fashion — is the defining structural element of the current bullish phase and the most critical technical reference on the chart. This trendline currently intersects in the vicinity of the 1.1760–1.1770 area and is rising with each passing session. The horizontal support band near 1.1775–1.1780, visible as a clearly marked zone on the chart, overlaps closely with the rising trendline, creating a powerful confluence support zone where both dynamic and static support reinforce each other. This layering of support forms the bedrock of the bullish case and represents the level that bulls must defend to maintain the integrity of the current trend structure.

A sustained 2-hour close below 1.1760, accompanied by a definitive breach of the ascending trendline, would mark a meaningful deterioration in the bullish thesis and shift the near-term bias to neutral. Should such a breakdown materialize, the next layer of support lies in the 1.1650 area — a horizontal level that provided a base during the early April consolidation phase before the explosive breakout. A deeper failure below 1.1650 would bring the 1.1500 psychological support and the former downtrend lows back into focus, signaling that the rally from early April was corrective in nature rather than the beginning of a sustained trend reversal.

On the upside, the immediate resistance to overcome is the 1.1800 psychological level, which has been acting as a near-term cap during the current consolidation. Price has repeatedly probed this area over the past several sessions without achieving a clean, sustained break — a pattern of resistance that must be resolved convincingly before bulls can claim the next leg higher with confidence. A decisive close above 1.1800 would clear the path toward the 1.1825–1.1850 zone, which corresponds to the recent swing highs from April 14–15 and represents the next meaningful resistance cluster. Beyond that, the primary upside target identified by the projected price path on the chart lies in the 1.1900–1.1940 major resistance band — a significant horizontal supply zone visible at the top of the chart that has capped price on multiple prior occasions. A sustained break of this region would represent a major technical achievement and open the door toward the 1.2000 psychological milestone, a level that would attract enormous attention from both speculative and institutional market participants.

The moving average configuration fully supports the bullish bias. Both the 9-period EMA and 21-period SMA are sloping upward, running in tight formation just beneath current price after the pair's dramatic shift from a bearish to a bullish trend following the April 5 breakout. The prior descending trendline from the upper-left portion of the chart — which previously acted as the ceiling of the entire downtrend — has now been convincingly breached and left far below current price levels, confirming that the structural shift from downtrend to uptrend is genuine rather than a temporary counter-trend move. The convergence of the two moving averages at current price levels, combined with the ascending trendline support below, frames a tight, low-risk setup that favors continuation of the bullish trend following the current consolidation.

The projected path drawn on the chart mirrors this reading precisely — showing a brief, shallow pullback toward the ascending trendline and moving average confluence near 1.1760–1.1780, followed by a resumption of the uptrend toward the 1.1900–1.1940 resistance ceiling. This base case remains valid as long as the ascending trendline holds on a closing basis.

TRADE RECOMMENDATION

BUY EUR/USD

ENTRY PRICE: 1.1775

STOP LOSS: 1.1730

TAKE PROFIT: 1.1920

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

2381

Win Rate

63.52%

P/L Ratio

0.74

Focus on

XAUUSD, EURUSD, GBPUSD

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