The euro rose against the US dollar on Tuesday morning in Europe, reaching weekly highs above 1.1570. European equities turned positive after an early fall, and an upward revision to Eurozone services data supported the move.
The Eurozone HCOB Services PMI was revised to 50.2 from 50.1, down from 51.9 in February. Spain printed 53.3, France contracted for a third month, and Germany was revised to 50.9 from 51.2.
Geopolitical Risk And Market Reaction
Risk appetite stayed limited as a US deadline linked to Iran neared. Donald Trump warned that the US could destroy Iran if the Strait of Hormuz was not reopened before Tuesday at 8 PM Eastern Time (00:00 GMT Wednesday).
Pakistan’s 45-day ceasefire proposal was rejected by the US and Iran, and Iran put forward an alternative plan. ECB Governing Council member Dimitar Radev said it was too early to judge whether rates might rise in April, citing uncertainty.
On the 4-hour chart, RSI neared 60 after sitting near 50, while the MACD histogram moved above zero, with the MACD line flat. A break above 1.1570 could open 1.1630–1.1640 and then 1.1667, while support sits at 1.1505, then 1.1440, and 1.1411.
We remember the situation in April 2025, when the Euro pushed towards 1.1570 despite significant geopolitical tension with Iran. That fleeting strength is a stark contrast to where we are today, with the pair trading much lower around the 1.0850 mark. The memory of that risk-off event serves as a reminder of how quickly sentiment can turn, even when a currency appears to be recovering.
Looking back, the Eurozone services PMI in 2025 was a barely expansionary 50.2, showing deep economic fragility. By comparison, the most recent HCOB Services PMI for March 2026 registered a more confident 51.5, suggesting a more stable, albeit slow, recovery is underway. This, combined with March 2026 inflation holding at 2.4%, gives the European Central Bank a very different set of data to consider than the uncertainty they faced a year ago.
The uncertainty in 2025 created clear opportunities for those trading volatility, and we see a similar, though less dramatic, setup now. With the ECB’s deposit facility rate currently at 3.75%, markets are pricing in potential rate cuts later this year, creating divergence with the Federal Reserve. Buying options, such as straddles or strangles, could be a prudent way to position for price swings as new inflation and employment data is released.
Current Focus And Trading Implications
While the key technical levels of 1.1640 and 1.1505 were critical points of interest in 2025, our focus has completely shifted to the current range. We are now watching resistance at the 1.0900 psychological level and key support near 1.0780 for any breakout. Traders who believe the Eurozone economy will lag behind the US could consider buying puts with strike prices below this support level to hedge for a downward move.
The lesson from 2025 is that geopolitical headlines can instantly override fundamentals, and traders should remain cautious. Implied volatility in EUR/USD options is currently subdued compared to historical averages, suggesting option premiums are relatively cheap. This may present an opportunity to build positions that would profit from a sudden increase in market turbulence in the coming weeks.
