The EUR/USD pair finished a second consecutive week a handful of pips above the 1.1500 level, seesawing between gains and losses in line with United States (US) President Donald Trump’s rhetoric on the Middle East war. Financial markets revolved around the Iran war, paying little attention to critical US employment data.
War in the Middle East
Pessimism backed the Greenback at the beginning of the week, as the Houthis, an Iran-backed militant group in Yemen, entered the Persian Gulf conflict by launching a missile attack on Israel. The US Dollar (USD) changed course on Tuesday, as market mood improved after President Trump said the US would leave Iran in two or three weeks. Still, the USD resumed its decline on Thursday, following yet another round of Trump’s comments at a White House press conference.
Words vs facts
Beyond stating that the US would leave the Middle East in a few weeks, Trump flooded headlines.
US President Trump’s words aimed to keep Oil prices under control, as the barrel of West Texas Intermediate (WTI) once again surpassed the $100 mark. But he did not succeed. The black gold is closing the week with solid gains near $105, the highest daily close since July 2022, as pessimism rules.
President Trump claimed the US is winning the war and that they have smashed Iran. He repeated that their main goal was to destroy Tehran’s nuclear program. Trump also said he is considering pulling the country out of NATO, given allies’ reluctance to help reopen the Strait of Hormuz. He later noted the US does not need the Strait reopened and that it’s others’ problem.
At the end, facts, not his words, maintain the mood depressed.
The facts are that there is no deal with Tehran, and the country is not willing to negotiate, nor to give up. The Strait of Hormuz remains closed, although Iran seems to be working on a protocol to allow traffic through the critical bottleneck. Also, the US deployed land troops in the region, and attacks continue. By the end of the week, Trump shared on Truth Social:
With a little more time, we can easily OPEN THE HORMUZ STRAIT, TAKE THE OIL, & MAKE A FORTUNE. IT WOULD BE A “GUSHER” FOR THE WORLD??? President DONALD J. TRUMP”
US employment situation
Meanwhile, the US published employment data that could shape the Federal Reserve (Fed) monetary policy path.
The US Nonfarm Payrolls (NFP) report showed the country added 178K new jobs in March, according to data released by the US Bureau of Labor Statistics (BLS) on Friday. February’s headline, however, was downwardly revised to -133K from an initial estimate of-92K. Additionally, the Unemployment Rate ticked lower to 4.3% from 4.4%, while the Labor Force Participation Rate edged marginally lower to 61.9% from 62%. Finally, wage pressures eased, with annual growth in Average Hourly Earnings down to 3.5%, from the 3.8% posted in February.
The economic data gave the USD some air, although limited due to thin market conditions due to the Good Friday holiday.
Earlier in the week, the US also published February Retail Sales, which were up 0.6%, better than the previous -0.1%, and the ISM Manufacturing Purchasing Managers’ Index (PMI) surged to 52.7 in March from the previous 52.4.
Generally speaking, data was positive, which at the end of the day, pointed to decreasing odds of a Fed rate cut in 2026.
European inflation heats up
Across the pond, Germany released its March inflation data. The Consumer Price Index (CPI) rose 2.7% year-on-year in March after 1.9% in February, according to preliminary estimates. Meanwhile, the Harmonized Index of Consumer Prices (HICP) increased 2.8% on a yearly basis, compared to 2% in February.
Eurozone figures were equally discouraging. The region’s HICP, the European Central Bank’s (ECB) preferred inflation gauge, rose 2.5% in March after posting 1.9% in February. On a monthly basis, headline inflation arrived significantly higher at 1.2% from 0.6% in February.
The ECB has pledged to react promptly should inflation run out of control. Indeed, one discouraging monthly reading seems too little to trigger a rate hike, yet as long as the Iran war continues, the inflation risks skew to the upside, boosting the odds for interest rate hikes in the near term.
What’s next in the docket
Data these days will add to speculation about what central banks may do next.
The March US ISM Services PMI and April EU Sentix Investor Confidence will be released on Monday, while the US February Durable Goods Orders are scheduled for Tuesday.
On Wednesday, the Eurozone’s February Retail Sales and Producer Price Index (PPI) figures. On the same day, the Fed will publish the minutes of the March monetary policy meeting. The Summary of Economic Projections (SEP) released after the March meeting showed that policymakers’ median projection pointed to a 25 basis-point (bps) rate cut in 2026. Nevertheless, minutes are expected to have a limited impact on the USD, overshadowed by the latest developments in the Iran war.
Next in line, the US will publish an update of the Q4 Gross Domestic Product (GDP) on Thursday. Finally, Friday will be inflation day, as Germany will publish the final estimate of the March HICP, while the US will publish the March Consumer Price Index (CPI). Higher-than-anticipated inflation could boost speculation of a Fed interest rate hike. Later, the preliminary estimate of the April Michigan Consumer Sentiment Index will close the week.
However, at the end of the day, it’s all about the war, and developments in the Persian Gulf will continue to shape the market’s direction.
EUR/USD technical outlook
From a technical perspective and according to the daily chart, EUR/USD is bearish. Spot holds below the declining 20-day Simple Moving Average (SMA) around 1.1550, which keeps sliding under the flattened 100- and 200-day SMAs clustered near 1.1680–1.1690, keeping the broader tone pressured. The Momentum indicator turned lower and is now pressing its midline from above, while the Relative Strength Index (RSI) indicator hovers in the mid-40s after recovering from oversold conditions, still pointing to sellers holding the grip.
In the weekly chart, the risk for EUR/USD also skews to the downside. The pair remains below the 20-week SMA at 1.1677, while comfortably above the 100- and 200-week SMAs clustered near 1.12 and 1.09, which still limit a broader downtrend. Technical indicators, in the meantime, remain below their midlines, with the Momentum heading south and signaling strengthening downside pressure, and the RSI holding directionless around 45. The pair held within range for a fourth consecutive week, as investors await more clarity on the war front before compromising steeper positions.
Initial resistance emerges at 1.1600, followed by the 20-week SMA around 1.1675, reinforced by the presence of the 100- and 200-day SMAs right above it. Clearer gains beyond 1.1700 could see the pair extend its advance towards 1.1800, although at this point, it is quite an unlikely scenario. On the downside, the recent low near 1.1500 forms first support, followed by the 1.1410 region, where the pair bottomed this year. A sustained violation would expose the 100-week SMA zone just above 1.12 as the next bearish target.
(The technical analysis of this story was written with the help of an AI tool.)