Big Central Bank Risks This Week

EURUSD is on watch this week as traders brace for the double whammy of the both the Fed and ECB March rates meetings. The pair has fallen sharply in recent weeks, dropping from January’s YTD highs around the 1.21 mark to current lows of 1.14. The reversal has been heavily driven by the resurgence we’ve seen in USD. In response to the Iran war, USD has seen strong safe-haven demand with the DXY reversing from January lows to trade back above the $100 mark.

Fed & ECB On Watch

Looking ahead this week, alongside incoming headlines on the Iran war, traders will be watching the Fed and the ECB. Both central banks are expected to strike a more hawkish tone in response to surging energy prices and fresh inflationary risks. Currently, USD remains in pole position and a firmly hawkish message from the Fed should maintain that dynamic, keeping EURUSD skewed lower while the Iran war rages on. However, if the Fed strikes a more reserved and neutral tone, this could create some upside opportunity for EURUSD if the ECB then follows with a strong, hawkish message. Ultimately, with oil prices soaring and the war showing no signs of ending soon, USD is likely to remain well bid near-term and the Fed should further feed into this bullish sentiment, keeping EURUSD risks tilted lower for now until the picture changes in the Middle East.

Technical Views

EURUSD

The sell off in EURUSD has seen the pair breaking down through the mid 2025 lows around 1.1490. For now, support at the July 2025 lows 1.1404 is holding. However, momentum studies are bearish here and risks of a breakdown are seen with 1.12 the deeper level to watch if we push lower here.