EUR/USD fell from last week’s high near 1.1740 on Monday but stayed above 1.1670 and hovered just under 1.1700. The pair rebounded from early Asian session lows around 1.1670.
Oil prices rose after US-Iran talks failed and the US said it would block the Strait of Hormuz, which supported the US Dollar. The Euro’s drop was limited, while Brent crude traded just above 100 USD per barrel and EUR/USD moved below 1.17.
Market Focus And Near Term Drivers
The day’s economic diary is light, so headlines from Iran may keep driving price action. On Tuesday, attention turns to ECB President Christine Lagarde ahead of the next monetary policy decision due on 30 April.
EUR/USD kept a mild bullish bias while consolidating above 1.1630. The Relative Strength Index was around the mid-50s and MACD hovered near the zero line.
Resistance sits at 1.1725–1.1735, then 1.1825, with a further level near 1.1930. Support is at 1.1670, then 1.1630–1.1640, and a rising trend support near 1.1590.
We are seeing a familiar pattern of consolidation in EUR/USD, reminiscent of the period just before the Hormuz blockade in April of last year. The market seems too calm, with implied volatility at low levels despite significant geopolitical risk simmering in the background. With the Cboe EuroCurrency Volatility Index (EVZ) currently trading near 6.8, we believe the market is underpricing the potential for a sharp move.
Options Strategy And Volatility Positioning
Given this complacency, we think buying volatility is the most prudent strategy for the coming weeks. A long straddle using at-the-money options would position a trader to profit from a significant price swing in either direction, whether from a sudden de-escalation or an unexpected turn for the worse. This approach is favorable when the market expects stability, as it did in 2025, right before oil prices spiked past $100 per barrel.
Just as we watched the ECB in 2025, we must now focus on the upcoming central bank meetings, as any hawkish or dovish surprise could break the current deadlock. Market pricing, according to recent overnight index swaps, indicates a 70% chance of a 25 basis point hike from the Fed, but a surprise hold could send the dollar tumbling. This monetary policy divergence remains a key catalyst for the currency pair.
For those with a directional view, the technical levels we observed last year can serve as a guide for structured trades. Purchasing call spreads above the 1.1750 resistance level offers a cheap way to bet on a bullish breakout, while put options below the 1.1650 support can serve as a hedge. The current put-to-call ratio on CME euro options sits at 0.92, suggesting a slight bullish bias but no strong conviction from the broader market.
The relationship between oil and the dollar that we saw play out in 2025 remains critical. We are watching Brent crude prices, which have crept up 8% in the last month to over $95 a barrel, putting pressure on global inflation expectations. Any further escalation in geopolitical tensions could push oil higher, likely strengthening the dollar as a safe-haven asset and pushing EUR/USD down through its recent support levels.
