The EURUSD rate is currently trading just below a slanted resistance line. The technical setup points to a further decline, and the fundamental picture tells a similar story—adding to mounting pressure on the euro.
Behind the pair’s medium-term weakness lies a stark policy divergence between the US Federal Reserve (Fed) and the European Central Bank (ECB).
On March 18, the American regulator held interest rates in the same 3.50%–3.75% range. Chair Jerome Powell struck a hawkish tone during the press conference, noting that progress on inflation has recently stalled due to surging crude prices. He also revised the Fed’s easing cycle for 2026, predicting only one rate cut closer to the year-end. More pessimistic scenarios even suggest that this reduction could slip into 2027. What’s more scary for traders, in his speech, Powell did not exclude the probability of rate hikes in case of a prolonged energy crisis. The only relief was that the US central bank would not rush this decision. So, it is highly unlikely in the near term.
The very next day, March 19, the ECB kept borrowing costs unchanged at 2.00% for the sixth consecutive meeting. The key difference lies in the tone: the regulator stated its willingness to act against the spillover effects of the current energy shock. As a result, markets are now pricing in two or more rate hikes this year, with the first step potentially coming as early as April.
The ECB’s sudden hawkish rhetoric can be explained by the region’s vulnerability to expensive fuel. As a net energy importer, Europe finds itself caught between a rock and a hard place—with Brent crude above $100 per barrel posing a tangible inflation threat.
The final recommendation:
— Sell the EURUSD pair, targeting 1.11000 within one to two months;
— Place a Stop Loss order 1% above the entry point to mitigate risk if the market moves against us.
This content is for informational purposes only and is not intended to be investing advice.
