EUR/USD: In the final phase of a consolidation wedge

The EUR/USD completed a consolidation wedge today, as markets remained cautious following Trump's latest statements on the war and oil prices rebounded sharply after Monday's welcome pullback.

Donald Trump announced a five-day suspension of attacks on Iranian military and energy sites. The US president also claimed that his administration had been in contact with an unidentified "senior official."

However, the speaker of the Iranian parliament denied any negotiations with the US, citing "false information" intended to "manipulate the financial and oil markets and extricate the US and Israel from the quagmire".

"The circuit breaker the markets needed," comments Matthew Amis, chief investment officer at Aberdeen Investments. "Sales have, for the moment, stalled after a very difficult start to the week. European sovereign debt markets, as expected, are reacting positively to Trump's announcements, despite the Iranian response. However, to significantly reverse the movements observed in recent weeks, more than words and concrete actions would be needed: specifically, seeing ships sailing through the Strait of Hormuz."

This "Trumpian" about-face therefore doesn't fundamentally change the situation at this stage, and central banks remain in an uncomfortable position, especially in the EU where dependence on hydrocarbons is greater.

"In the baseline scenario of a temporary rise in inflation linked to a supply shock, the ECB should opt for the status quo in 2026 while adopting a firm tone to firmly anchor medium-term inflation expectations. It should not rush to raise its rates, as some central bankers have suggested, at the risk of repeating the mistakes of 2011. The ECB then raised its rates twice in response to rising energy prices, which triggered a recession and led the central bank to quickly reverse course," analyses Aline Goupil-Ragues, developed market strategist at Ostrum AM.

On the statistical front, it's worth noting that while the preliminary March industrial activity barometer reading exceeded expectations at 51.3, the services sector score, conversely, disappointed at 50, narrowly missing the 50-point threshold that, by definition, separates expansion from contraction in the sector.

Right now, the EUR/USD is trading at $1.1590.

KEY TECHNICAL ELEMENTS
The 200-day moving average (in brown) was decisively broken, with a subsequent pullback that confirmed the trend. The 20-day moving average (in dark blue) has just crossed below its 50-day counterpart (in orange) and the previously mentioned long-term trend line, all within just a few trading sessions.

MEDIUM-TERM FORECAST
Based on the key technical factors we have mentioned, our medium-term outlook for the EUR/USD is bearish.

Our entry point is $1.1587. The price target for our bearish scenario is $1.1013. To protect your capital, we advise placing a stop-loss order at $1.1726.

The expected profit for this strategy is 574 pips, and the potential loss is 139 pips.