Euro breaks records: peace talks and the ECB rate could send EURUSD to new highs

The EURUSD pair is rising for the eighth session with minor corrections, with quotes currently testing the 1.1810 level. Discover more details in our analysis for 16 April 2026.

EURUSD forecast: key takeaways

• Donald Trump stated that the war with Iran may end very soon
• Capital has started to leave the dollar, the main safe haven
• Inflation in the eurozone remains above the ECB’s 2% target
• EURUSD forecast for 16 April 2026: 1.1865

Fundamental analysis

The EURUSD forecast takes into account that the pair continues its upward surge, reaching new highs for this month. In the morning, quotes consolidated around 1.1810, extending their winning streak to eight consecutive days.

The main driver of the euro’s growth is not the strength of the European economy, but the weakness of the USD, caused by expectations of a near-term end to the conflict in the Middle East.

Key events of recent days:

• Trump’s signals: US President Donald Trump stated that a new round of peace talks with Iran may take place in Pakistan, adding that the war with Iran may end very soon
• Market reaction: investors took this as a signal of a reduction in the geopolitical risk premium. Capital has started to leave the dollar, the main safe haven of recent weeks, and has flowed into riskier assets, including the euro and gold

Despite the optimism, reality remains complicated. The US has officially begun a naval blockade of the Strait of Hormuz, and the Pentagon is preparing to deploy thousands of additional troops to the Middle East. This means that the fragile balance between hope and reality remains in place, and any failure in negotiations may reverse the market instantly.

In addition to geopolitics, the euro is supported by shifting interest rate expectations.

European Central Bank:

• Inflation in the eurozone remains above the ECB’s 2% target level, with a significant contribution coming from higher energy prices amid the Middle East conflict
• Markets are pricing in at least one, and by some estimates two, ECB interest rate hikes by the end of the year
• ECB Governing Council member Joachim Nagel stated that the April decision will depend on the situation in the Strait of Hormuz

US Federal Reserve:

• In contrast to the ECB, markets no longer expect the Fed to lower interest rates this year. Moreover, the release of weaker-than-expected Producer Price Index data on Tuesday weakened the dollar, as it reduced fears of immediate monetary tightening
• Cleveland Fed President Beth M. Hammack stated that rates are at an acceptable level, and keeping them there is the baseline scenario for some time

The divergence in the expected actions of the ECB and the Fed, a hike or a pause, is working in the euro’s favour, making it more attractive for investors seeking yield.

The EURUSD fundamental analysis for 16 April takes into account that the pair is experiencing a perfect storm in reverse. Hopes for a truce in the Middle East have pushed the dollar down, while expectations of an ECB rate hike amid the Fed’s pause are giving the euro its own monetary trump card. The pair has fully recovered its war losses and is now targeting the 1.1900 level. At the same time, it is necessary to take into account that the market remains extremely sensitive to any news from the conflict zone, and the current growth can still be classified as news-driven trading, which may be corrected just as sharply.

Technical outlook

On the H4 chart, the EURUSD pair formed a Spinning Top reversal pattern near the upper Bollinger Band. At this stage, quotes may form a corrective wave following this signal. Since they remain within an ascending channel, the 1.1765 support level may act as the pullback target. A rebound from this level would open the way for a continued uptrend.

At the same time, today’s EURUSD forecast also suggests another scenario. Quotes may continue to rise and test the 1.1865 resistance level. After breaking above the resistance level, they may continue their upward momentum, with 1.1900 acting as the next target.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: upward
• Key resistance levels: 1.1820 and 1.1865
• Key support levels: 1.1765 and 1.1655

EURUSD trading scenarios for today

Main scenario (Buy Stop)

Consolidation above 1.1820 would confirm the continuation of the uptrend amid a weaker dollar and lower inflation expectations. In this case, the pair may continue to rise to new local highs around the 1.1900 mark.

• Take Profit: 1.1900
• Stop Loss: 1.1790

Alternative scenario (Sell Stop)

A breakout below the 1.1765 support level would confirm another corrective wave after overbought conditions and profit-taking by buyers.

• Take Profit: 1.1655
• Stop Loss: 1.1790

Risk factors

Risks to growth are related to a stronger dollar amid strong US macroeconomic data or signals from the Federal Reserve. A deteriorating geopolitical backdrop could also be a contributing factor, increasing demand for safe-haven assets, particularly the USD, and triggering a corrective wave in the EURUSD rate from its current highs.

Summary

The euro continues to strengthen amid the Middle East conflict, signals from the White House, and expectations of action by the Federal Reserve and the ECB. EURUSD technical analysis suggests growth towards the 1.1865 level after a correction.

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