Big Moves Following Trump News

The current de-escalation trade is fuelling big cross-market moves on the back of Trump comments yesterday signalling a potential end to the Iran war within coming weeks. Energy prices and USD are falling, while risk assets and USD FX counterparts are rallying. In the FX space, EURUSD looks well positioned for a bigger move north here, offering opportunities. A firmly hawkish message from the ECB at its last meeting has boosted expectations of an ECB rate hike this month. The bank warned of inflationary risks linked to the Iran war and ongoing risks around the Russia-Ukraine war.

Eurozone Inflation Jumps

These inflationary risks were put in focus this week with eurozone inflation seen jumping up to 2.5% from 1.9% in February. This marks the highest inflation reading for the bloc since January 2025 and puts further pressure on the ECB to address the situation. In contrast, the Fed is seen keeping rates on hold near-ter, while still forecasting a further rate cut later in the year. As such, the divergence in outlook between the two central banks and traders’ expectations should create room for a higher push in EURUSD, particularly if USD continues lower near-term on expectations that the Iran war will soon end.  

Technical Views

EURUSD

The big 1.1490 support level continues to hold for now and while that remains the case, focus is on a fresh push higher with 1.1756 and the retest of the broken bull trend line the key objective for bulls. If we break back above there, 1.20 will be the higher bull target to note.