The EUR/USD pair edges higher by some 0.33% on Thursday as risk appetite improves, with Israel and Lebanon seeming ready to begin peace talks, even though hostilities continued. This weighed on the US Dollar (USD), which is on the back foot, down 0.18% according to the US Dollar Index (DXY). At the time of writing, the pair trades near the 1.1700 milestone, up 0.32%, after hitting a five-week high of 1.1723 earlier in the day.
Euro gains as peace talk hopes pressure Dollar before US CPI data.
The Middle East conflict grabbed the headlines as economic data took a back seat, awaiting attention, and the US Consumer Price Index (CPI) report on Friday might be what economists need to crunch the numbers.
Meanwhile, Israel escalated its attacks on Hezbollah, as the fragile ceasefire between the US and Iran is threatened by Israeli attacks on Lebanon, with the Iranian regime emphasizing that the truce also extends to the Israel-Lebanon border. Recently, Israeli Prime Minister Benjamin Netanyahu thanked the Lebanese Prime Minister Nawaf Salam call, as both countries agreed to begin discussions next Tuesday in Washington.
The dip in Oil prices is a headwind for the Euro (EUR), as most countries are net energy importers. Also, the strong positive correlation between WTI, denominated in American dollars, pushed the Greenback lower, as depicted by the DXY, which tracks the USD’s performance against six currencies and trades at 98.82.
Data from the US showed that inflation, although it remains above the Fed’s 2% goal, remains contained at around 2.8% on an annual basis, as reflected in the Personal Consumption Expenditures (PCE) Price Index. The core PCE, the Fed’s main inflation gauge, ticked a tenth lower from 3.1% to 3% in February, as economists had forecast. Meanwhile, the US economy expanded at a lower pace than the expected 0.7% in Q4 2025, rising 0.5%.
Other data showed that the jobs market had stabilized after the release of Initial Jobless Claims for the week ending April 4, rising by 219K, above forecasts for a 210K increase, up from the 203K number for the previous week.
Despite the solid data release and ‘hawkishly’ tilted FOMC minutes from the last meeting, EUR/USD is projected to extend its gains on monetary policy divergence. Market participants suggest that the European Central Bank (ECB) would tighten policy by 56 basis points towards year-end.
In Europe, Germany’s industrial production fell unexpectedly in February, pointing to a sluggish first quarter, despite stronger-than-expected export growth driven by solid European demand.
EUR/USD Price Analysis: Technical Outlook
In the daily chart, EUR/USD trades at 1.1696. The pair is marginally above the clustered 50-, 100- and 200-day simple moving averages (SMAs) around 1.1677, which now act as near-term support and hint at an improving underlying tone. Price is also testing the descending resistance trend line drawn from 1.1929, while the 14-day Relative Strength Index hovers near 58, suggesting constructive but not yet overbought bullish momentum as the pair challenges this pivot region.
On the downside, immediate support is seen at the upward-sloping trend line and the nearby SMA cluster between 1.1696 and 1.1677, where a break would weaken the nascent bullish bias and open the way to deeper retracements. On the topside, a sustained move above the descending resistance trend line at 1.1696 would signal a clearer bullish breakout, exposing higher recovery levels in the sessions ahead as sellers lose control of the recent downtrend structure.
(The technical analysis of this story was written with the help of an AI tool.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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