EUR/USD traded just above 1.1800 on Thursday and was set for a nine-day rise. Demand for the US Dollar eased as hopes grew for fresh peace talks involving the US and Iran.
Donald Trump said indirect talks with Tehran were continuing and that discussions could resume in the coming days. He also said Israel and Lebanon would begin “direct talks” soon.
Federal Reserve Pressure And Leadership Uncertainty
Trump again criticised Federal Reserve Chair Jerome Powell and said he could remove him from his Board of Governors seat if he did not step aside. Powell’s term as Fed Chair ends on 15 May, while his Board term runs until 2028.
On the four-hour chart, the Relative Strength Index was near 66 and the MACD dipped slightly below zero. Resistance remained around 1.1825, with a move higher opening the way towards 1.1930.
Support was seen just above 1.1770, then between 1.1720 and 1.1740. A break below about 1.1650, tied to the 8 and 12 April lows, would weaken the current upward trend.
Looking back at the situation in April 2025, we saw the EUR/USD pair rally strongly to 1.1800, driven by hopes for peace in the Middle East and political pressure on the Federal Reserve. Today, the environment is fundamentally different, with the pair trading much lower, near 1.0750, as those peace hopes have faded and economic data has taken center stage. The nine-day rally we witnessed last year serves as a stark reminder of how quickly sentiment can shift markets away from their underlying fundamentals.
Shifting Drivers From Geopolitics To Data
The brief weakening of the dollar in 2025 was a reaction to the possibility of de-escalation in Iran, a classic “risk-on” move. However, persistent tensions in the region throughout late 2025 and early 2026 have re-established the dollar’s role as the world’s primary safe-haven asset. Unlike last year, traders are now buying the dollar on news of instability, not selling it on hopes of peace.
The political drama between the US President and the Fed Chair in 2025 introduced significant uncertainty, weighing on the dollar. Today, the focus has shifted firmly to the wide gap in economic performance and monetary policy between the US and the Eurozone. US inflation data from March 2026 showed a stubborn CPI at 3.1%, while the Eurozone’s HICP has cooled to 2.5%, reinforcing the Federal Reserve’s hawkish stance compared to the European Central Bank.
For derivative traders, this means the strategies of 2025 are ill-suited for today. Given the current lower exchange rate, buying long-dated EUR/USD call options with strike prices around 1.1000 could be a calculated way to position for any unexpected positive surprises out of Europe. This allows for upside potential while capping risk in a market that is fundamentally favouring the dollar.
The interest rate differential is a far more dominant factor now than it was during the political noise of last year. US unemployment remains low at 3.8%, supporting a “higher for longer” rate policy, whereas the Eurozone figure is 6.5%. This makes positioning for a stronger dollar via shorting EUR/USD futures contracts or using forward contracts to hedge euro-denominated assets a core strategy for the coming weeks.
Therefore, the technical levels like 1.1825, which were key resistance points in 2025, are now distant memories rather than immediate targets. We must pivot our focus from the headline-driven sentiment of last year to the hard economic data that dictates central bank policy today. Upcoming inflation and employment reports will be far more influential on the EUR/USD pair than any speculative peace talks.
