The EUR/USD pair stayed in a narrow trading range on Tuesday, holding above the key 1.1550 level following the release of Germany’s latest ZEW economic sentiment data. Technical indicators showed limited momentum, with the Relative Strength Index (RSI) hovering slightly above 50 and the currency pair fluctuating around its 20-period Simple Moving Average (SMA) on the 4-hour chart.
Key Technical Levels in Focus
On the downside, the 1.1550 mark remains the first significant support level, as it represents the midpoint of the ascending price channel. Further support lies at the 1.1500–1.1490 zone, which includes the 50-period SMA, followed by the 1.1460 level, marking the lower boundary of the channel.
Resistance levels are seen at 1.1600, a psychological and static barrier. Beyond that, the next levels to watch are 1.1640, the top edge of the ascending channel, and 1.1700, another static and round level.
Geopolitical Tensions and Risk Sentiment Shape Dollar Demand
A modest improvement in global risk appetite helped push EUR/USD slightly higher on Monday, weakening demand for the US Dollar (USD). However, sentiment turned more cautious by early Tuesday. US stock index futures fell about 0.5% during European trading hours, signaling risk-off behavior.
Optimism had grown earlier in the week after The Wall Street Journal reported that Iran was seeking to end hostilities and resume nuclear talks. But hopes for de-escalation faded quickly. Citing Iran’s state news agency IRNA, Reuters reported that Iran had launched a new, more powerful wave of missiles toward Israel. A senior Iranian military commander also warned that hundreds of additional drones would soon target Israel.
ECB Policy Outlook and Upcoming US Data
In Europe, European Central Bank (ECB) policymaker Yannis Stournaras said Tuesday that the ECB has likely reached an “equilibrium” with current interest rates. He added that any future rate cuts would depend on incoming economic data.
Later in the day, markets await the release of US Retail Sales and Industrial Production data for May. However, analysts expect investors to overlook these figures as they focus on Wednesday’s Federal Reserve interest rate decision. If the cautious market tone continues and US equities open lower, the USD may remain firm, making it difficult for the euro to gain further ground.
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