EUR/USD Breaks Free From Two-Month Wedge — Bulls Eye 1.1900

Traders' Opinions

Summary:

The Euro holds modest gains against the Dollar near 1.1680 as Middle East ceasefire hopes remain fragile following Iran's closure of the Strait of Hormuz, while hawkish FOMC minutes and looming inflation data keep the greenback well-supported.

BUY EURUSD

EXP

PENDING

1.16700

Entry Price

1.19000

1.15000

1.16967 -0.00015 -0.01%

Pips

PENDING

1.15000

Exit Price

1.16700

Entry Price

1.19000

The Euro is managing to hold its ground against the US Dollar heading into Thursday's North American session, trading around the 1.1680 level after finding a measure of stability following an early dip to 1.1650. But make no mistake — the mood across currency markets this morning is anything but confident. The pair remains firmly below Wednesday's session high of 1.1721, a ceiling that capped bullish momentum as geopolitical optimism surrounding a potential Middle East ceasefire began to unravel in real time.

The latest flashpoint comes from Tehran, which moved to close the Strait of Hormuz following what Iranian authorities described as massive Israeli strikes on Lebanon — a development that sent a shockwave through energy markets and rattled the fragile optimism that had briefly lifted risk appetite. Iran's foreign ministry publicly accused both Washington and Tel Aviv of violating the terms of the proposed ceasefire, while US and Israeli officials pushed back sharply, insisting that Lebanon falls entirely outside the scope of the agreement currently on the table.

The diplomatic temperature rose further after US President Donald Trump issued a stark warning, threatening direct action should Tehran fail to comply with the framework. "If Iran doesn't honor the deal, there will be consequences — and they will be swift," Trump told reporters Wednesday evening, language that markets interpreted as an escalation signal rather than a resolution.

Yet, in a development that has kept a complete market collapse at bay, both parties have confirmed they will send delegations for direct talks in Pakistan — a rare piece of constructive news that has preserved a thread of hope and prevented a more aggressive flight to safe-haven assets. For now, that diplomatic lifeline is doing just enough to stop EUR/USD from sliding further, though the pair's upside appears firmly capped until there is tangible progress on the ground.

Compounding the Euro's struggles is a decidedly more hawkish tone emanating from Washington. Minutes from the Federal Reserve's March Federal Open Market Committee meeting, released Wednesday, painted a picture of a central bank increasingly uncomfortable with the inflation trajectory. Policymakers acknowledged that the path back to the 2% inflation target will take considerably longer than previously anticipated — a significant shift in language that caught several market participants off guard.

More strikingly, and for the first time since the Fed began its easing cycle back in August 2024, certain committee members openly raised the possibility of monetary tightening. While this remains a minority view within the FOMC, the mere fact that rate hikes are being discussed again represents a material change in the policy narrative, and the US Dollar has wasted no time in repricing higher as a result. In my view, this is the single most important development for Dollar bulls this week — the market had been increasingly pricing in two or three cuts through the remainder of 2026, and those expectations are now being meaningfully challenged.

The timing could not be more consequential. Thursday's release of the Personal Consumption Expenditures Price Index — the Fed's preferred inflation gauge — will be closely scrutinized for early signals of how rising energy costs tied to the Iran conflict are feeding through into consumer prices. But the real litmus test arrives Friday, when the March Consumer Price Index lands. With oil prices threatening to breach the $100 per barrel threshold and Strait of Hormuz fears adding fresh upward pressure to energy costs, a hotter-than-expected reading could trigger a decisive Dollar surge and push EUR/USD back toward the 1.1600 level and potentially lower.

On the European side of the ledger, the data flow provided little comfort for Euro bulls. Germany's Industrial Production figures for February came in below expectations, with factory output declining against the consensus forecast — a sobering reminder that Europe's largest economy continues to struggle with structural headwinds including weak export demand, elevated input costs, and persistent energy price pressures. The trade surplus also contracted, though by less than feared, with both imports and exports surprising to the upside in what was an otherwise mixed release.

The market reaction to the German data was largely muted, with EUR/USD traders choosing to keep their attention squarely on the geopolitical backdrop and upcoming US inflation prints rather than domestic European fundamentals. That said, the ongoing softness in German industrial output is not something that can be ignored indefinitely — it adds to the European Central Bank's growing dilemma of how to balance stubborn inflation on one side with weakening growth on the other.

Technical Analysis

From a technical perspective, EUR/USD has undergone one of the most significant structural shifts seen on this chart in several months. After spending the better part of February and March trapped within a well-defined descending wedge pattern — bounded by a falling trendline resistance from the 1.2050 highs in late January and a horizontal floor near the 1.1450–1.1500 support band — price has staged a forceful and decisive breakout to the upside. The descending trendline, which had capped every meaningful recovery attempt since mid-February, has now been convincingly breached, and the pair surged from the 1.1550 region all the way to an intraday high of 1.1720 in a near-vertical impulsive move that left little room for doubt about the directional intent of this breakout.

The breakout itself is technically significant for multiple reasons. First, it came with considerable momentum — a hallmark of genuine breakouts rather than false ones. Second, it completed a classic descending wedge resolution, a pattern that is inherently bullish in nature as it reflects diminishing selling pressure within a contracting range before buyers overwhelm the structure entirely. The measured move projection from this wedge breakout, drawn on the chart, targets the 1.1800–1.1900 area, consistent with the prior resistance band that capped the pair during the February 10–13 consolidation period.

Price is currently consolidating just above the 1.1650 support level after its explosive rally, trading around 1.1676. This pullback from the 1.1720 peak should be read as healthy digestion of an outsized move rather than a reversal signal. The 9-period EMA, currently at 1.1661, and the 21-period SMA at 1.1627, are both tracking upward beneath price in a bullish alignment following their recent crossover. These moving averages now form a layered dynamic support structure — the 9 EMA near 1.1661 represents the first line of defense on any dip, while the 21 SMA near 1.1627 offers a secondary cushion. Provided price holds above these averages on a closing basis, the broader breakout thesis remains entirely intact.

The 1.1650 horizontal level is the immediate pivot the market is currently wrestling with. This zone represented prior minor support and resistance throughout late March and early April, and a sustained hold above it on the 4-hour timeframe would confirm that bulls have successfully converted resistance into support following the wedge breakout. A clean bounce from this zone would represent a textbook re-test and continuation opportunity, with initial upside targeting the 1.1720 recent high, followed by the 1.1800 resistance band — a major horizontal zone that defined price behavior in early-to-mid February and is clearly marked on the chart.

A sustained push through 1.1800 would be a landmark development technically, opening the door toward the 1.1950 major resistance ceiling — the level that capped the pair during the February 5–6 high and represents the uppermost boundary of this chart's significant supply zone. A break and close above 1.1950 would signal a full trend reversal on the higher timeframes and shift longer-term positioning decisively in favor of the Euro.

On the downside, a failure to hold above the 1.1600 psychological level — particularly if accompanied by a close back below the 21 SMA — would raise concerns that the breakout is losing steam and could invite a pullback toward the 1.1500–1.1450 former wedge support region. A sustained move below 1.1450 would undermine the entire breakout structure and suggest the pair remains trapped in a broader distribution phase, potentially exposing the 1.1400 floor visible at the bottom of the chart.

The overall structure, however, firmly favors the bulls. The descending wedge breakout, combined with the bullish moving average crossover, the 21-period SMA sloping upward, and the projected measured move targeting 1.1800–1.1900, collectively paint the picture of a pair in the early stages of a meaningful recovery — one that could extend significantly further should geopolitical developments and upcoming US inflation data align in the Euro's favor.

TRADE RECOMMENDATION

BUY EUR/USD

ENTRY PRICE: 1.1670

STOP LOSS: 1.1500

TAKE PROFIT: 1.1900

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EUR/USD Breaks Free From Two-Month Wedge — Bulls Eye 1.1900

Technical Analysis

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