EUR/USD pulls back to 1.1685 amid increasing uncertainty over Iran’s peace negotiations

Euro Retreats After Four-Day Surge

On Friday, the euro (EUR) ended its four-day climb against the US dollar, slipping from Thursday’s monthly peak of 1.1720 to 1.1685. This pullback comes as optimism about a potential US-Iran peace agreement wanes among investors.

Tehran has issued conflicting statements regarding its involvement in upcoming peace negotiations in Islamabad, Pakistan, scheduled for this weekend. These talks are overshadowed by accusations that the US and Israel have breached the 10-point ceasefire. The US has responded by announcing that Vice President JD Vance will soon lead a delegation to Islamabad.

Efforts toward peace are facing mounting obstacles. Israel’s extensive strikes on Lebanon have resulted in over 300 casualties since the ceasefire, while Iran’s mismanagement of maritime traffic in the Strait of Hormuz has led to a near blockade, with less than 10% of usual vessel movement recorded in the past day due to mines and bureaucratic delays.

European Inflation and Central Bank Pressure

Earlier on Friday, Germany released its consumer price figures for March, confirming that inflation is intensifying, largely due to the ongoing conflict involving Iran. This development is increasing pressure on the European Central Bank (ECB) to consider raising interest rates soon.

Later today, attention will shift to the US Consumer Price Index (CPI) report for March. Analysts expect a notable rise in inflation, which could influence the Federal Reserve’s approach to monetary policy.

Technical Outlook: Euro Showing Signs of Weakness

EUR/USD continues to display a positive trend, staying above a strong support zone around the mid-1.16 range. However, recent trading patterns suggest the momentum may be shifting.

• A possible Double Top formation has emerged near 1.1720.
• The 4-hour Relative Strength Index (RSI) indicates bearish divergence.
• The Moving Average Convergence Divergence (MACD) is approaching a bearish crossover below its signal line.

Key support is found at Thursday’s low near 1.1650, marking the neckline of the Double Top and previous highs between 1.1630 and 1.1640. Additional support lies at the trendline from late March, currently at 1.1575.

If the pair breaks above session highs at 1.1723, the bearish outlook would be invalidated, opening the path toward the highs seen on February 26 and 27, close to 1.1820.

(This technical analysis was generated with assistance from an AI tool.)