Euro strengthens above key Fibonacci levels, targeting January highs near 1.20 amid US-Iran tensions and shifting ECB rate expectations.
The Euro rose 0.4% against the US Dollar, supported by broader risk sentiment tied to the US-Iran conflict despite softer German trade data. Technical indicators show bullish momentum, with EUR/USD trading above critical Fibonacci levels and a rising RSI, suggesting potential for a retracement toward January’s high above 1.20.
ECB tightening expectations have moderated slightly, with June rate hikes now priced at 19 basis points, down 10 basis points from peak levels after the April 30 policy meeting. Weaker German trade figures, driven by a surge in energy imports, and renewed trade tensions from US tariff threats have had limited impact on the currency’s upward trajectory.
Options markets reflect shifting sentiment, with risk reversals favoring upside protection for the Euro, mirroring trends observed in late 2025 and early 2026. The currency remains a mid-performer among G10 peers, driven primarily by external risk factors rather than domestic fundamentals.