EUR/USD rose above 1.1570 in Tuesday’s European session, reaching one-week highs after earlier weakness. Market mood improved as European equities turned positive and Eurozone services data was revised up.
The Eurozone HCOB Services PMI was revised to 50.2 from 50.1, but it remained below February’s 51.9. Spain posted 53.3, France contracted for a third month, and Germany was revised down to 50.9 from 51.2.
Risk appetite stayed limited ahead of a US deadline related to Iran. Donald Trump said the US could destroy Iran if the Strait of Hormuz is not reopened before Tuesday at 8 PM Easter Time (00:00 GMT on Wednesday).
The US and Iran rejected a 45-day ceasefire proposal from Pakistan, and Iran presented an alternative plan. ECB Governing Council member Dimitar Radev said it is too early to judge whether rates will be raised in April due to uncertainty.
On the 4-hour chart, RSI neared 60 after holding near 50, while the MACD histogram moved above zero. A break above 1.1570 could open 1.1630–1.1640 and 1.1667, while support sits at 1.1505, then 1.1440 and 1.1411.
We are seeing a similar pattern to what happened around this time in 2025, when a brief sentiment boost pushed EUR/USD above 1.1570. Today, the pair is trading significantly lower, near 1.0850, reminding us how quickly such rallies can fade when not supported by fundamentals. This historical price action from last year serves as a key lesson on the importance of distinguishing short-term noise from a genuine trend change.
The mixed economic data from last year, with a revised Eurozone PMI of 50.2, mirrors the situation we face now. The most recent HCOB Services PMI for March 2026 came in at a more encouraging 51.5, but this masks ongoing weakness in France at 48.3. This divergence within the Eurozone suggests that any Euro strength will likely be uneven and prone to reversal, just as we saw in 2025.
Last year, traders were weighing the possibility of an ECB rate hike, but today the dynamic has completely flipped. We now see the European Central Bank clearly signaling a first rate cut for its June 2026 meeting, while recent US inflation data, holding firm at 3.5% year-over-year, has pushed back expectations for any Federal Reserve easing. This growing policy divergence is a powerful headwind for the Euro that did not exist in the same way last year.
The geopolitical risks from 2025, like the US-Iran tensions, served as a ceiling for the market’s risk appetite and capped that rally. Today, ongoing trade disputes and regional instability are having the same effect, keeping implied volatility for EUR/USD options elevated. Traders should therefore be cautious of chasing small rallies and consider that headline risk can emerge suddenly.
Given the expectation of a range-bound market capped by central bank divergence and geopolitical risks, selling short-dated options could be a viable strategy. We believe setting up iron condors or strangles with strikes around the 1.0750 to 1.0950 range allows traders to collect premium from the expected lack of a major breakout. This approach profits from the same kind of sentiment-driven, but ultimately contained, price action we observed last year.
However, to hedge against a surprise event, we should also look at buying longer-dated, out-of-the-money options. Given the ECB’s pending rate decision in June and persistent global tensions, holding some cheap, long-volatility positions provides a necessary safety net. This allows us to protect our core premium-selling strategy from an unexpected spike in volatility.
