EURUSD is hovering on the brink, geopolitics and interest rates may send the euro tumbling

Geopolitical conflicts continue to support the USD, pushing the EURUSD pair further down. The rate currently stands at 1.1535. Find more details in our analysis for 23 March 2026.

EURUSD forecast: key takeaways

• The ECB is ready to act; the Federal Reserve has paused
• Markets are pricing in at least two rate hikes from the ECB this year
• EURUSD forecast for 23 March 2026: 1.1420

Fundamental analysis

Fundamental analysis for 23 March 2026 takes into account that the EURUSD pair has frozen in tense anticipation, balancing between two powerful but opposing forces. On one hand, the geopolitical storm in the Middle East is pushing investors towards the dollar as a safe-haven currency. On the other hand, there is the hawkish sentiment of the European Central Bank, which is ready to raise rates to curb accelerating inflation.

The ECB is ready to move; the Fed has paused.

Last week, both central banks held meetings, and their rhetoric created a rare window of opportunity for the euro, but geopolitical headwinds are still preventing it from taking advantage.

• The ECB held the rate steady at 2.15%, effectively giving the green light to future tightening. Members of the Governing Council, including Joachim Nagel, are stating in unison that if inflation caused by the war starts to hold above the 2% target, they are ready to act quickly and decisively. Markets are already pricing in at least two rate hikes this year, with the first possibly coming as early as April
• The US Federal Reserve kept the rate unchanged at 3.75%. Unlike the ECB, the US regulator adopted a wait-and-see stance. Moreover, Morgan Stanley notes a paradoxical point: the US bond market has started to price in a Fed rate hike by the end of the year. However, it is not doing so because of a hawkish Fed stance, but because of expectations of new fiscal stimulus from the US government, which would drive inflation higher than the conflict in the Middle East and the approaching energy crisis

There are no major economic events on the calendar today, so the focus is entirely on geopolitics and statements from ECB officials. On Tuesday, key business activity indices (PMIs) will be released in the eurozone and Germany, and they will likely show worsening business sentiment, which may add further pressure on the euro.

Technical outlook

On the H4 chart, the EURUSD pair has formed a Shooting Star reversal pattern near the upper Bollinger Band and now continues its downward movement following this signal, with a potential downside target at 1.1420. A breakout below this level would open the door for a continued downtrend.

At the same time, today’s EURUSD forecast also suggests an alternative scenario. Since the quotes remain within a descending channel, they may form a corrective wave and test the resistance level around 1.1595 before moving lower.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: downward
• Key resistance levels: 1.1595 and 1.1655
• Key support levels: 1.1505 and 1.1420

Main scenario (Sell Stop)

A consolidation below 1.1505 would confirm the development of the downward wave and strengthen sellers’ positions. In this case, the downside target may be 1.1420. The movement potential stands at about 85 pips with a risk of around 25 pips.

• Take Profit: 1.1420
• Stop Loss: 1.1530

Alternative scenario (Buy Stop)

A breakout below the resistance level and consolidation above 1.1595 would strengthen buying pressure and mark the start of a new upward wave. In this case, the price could test the 1.1655 level.

• Take Profit: 1.1655
• Stop Loss: 1.1570

Risk factors

The risks to the EURUSD downside scenario are linked to a possible weakening of the USD amid dovish Federal Reserve rhetoric. An easing of the conflict in the Middle East may also put additional pressure on the USD. At the same time, further tightening signals from the ECB and other central banks may support the euro and increase the likelihood of a rise in the EURUSD rate.

Summary

The euro continues to lose ground against the USD amid geopolitical instability. EURUSD technical analysis suggests a decline towards the 1.1420 support level.

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