EURUSD on the edge of a sharp move: who will win – diplomacy or geopolitics

After rising, the EURUSD rate is forming a correction and remains under pressure from the Middle East conflict. EURUSD quotes are hovering around 1.1775. Find out more in our analysis for 21 April 2026.

EURUSD forecast: key takeaways

• The US fleet seized an Iranian cargo vessel
• The US President gave mixed signals regarding negotiations with Iran
• The ECB may raise the interest rate in June and September to fight inflation
• EURUSD forecast for 21 April 2026: 1.1870

Fundamental analysis

The EURUSD forecast takes into account that on Tuesday morning, quotes are consolidating around 1.1775, recovering after the downward gap at the start of the week.

Key events of recent days:

• The US fleet seized an Iranian cargo vessel in the Gulf of Oman after Iran again closed the Strait of Hormuz to commercial shipping
• The US President gave mixed signals: on the one hand, he expressed optimism about a new round of negotiations in Pakistan; on the other hand, he threatened more bombing if no deal is reached
• Iran’s chief negotiator stated that Tehran will not take part in negotiations under threat. Foreign Minister Abbas Araghchi accused the US of continuing to violate the ceasefire

Despite the shocking headlines, the market is refusing to panic. The US Dollar index (DXY) is holding in the 98.10–98.30 range, rather than jumping to 100 as might be expected in the event of real escalation. It appears that major players still believe in a diplomatic solution and are treating the hawkish rhetoric as a bargaining chip ahead of the second round of negotiations.

The dollar is preserving a structural advantage due to the higher rate, but if the ECB starts to catch up and raises rates in June and September to fight inflation caused by higher energy prices, while the Federal Reserve stands aside, the gap will start to narrow, creating potential for the euro to rise in the medium term.

The forecast for 21 April 2026 takes into account that the EURUSD pair is frozen at a crossroads. Geopolitics is pulling the dollar upwards as a safe-haven asset, but the market is refusing to panic and continues to believe in diplomacy. Fundamentally, the USD is stronger due to the interest rate, but the ECB is preparing to catch up. Technically, the pair is in a compressed spring state, and any trigger, peace or war, will cause a sharp move.

Technical outlook

On the H4 chart, the EURUSD pair formed a Hammer reversal pattern near the lower Bollinger Band. At this stage, quotes may continue their upward movement following this signal. Since they remain within an ascending channel, the 1.1870 resistance level may act as the upside target. A breakout above this level will open the way for continued upward momentum.

At the same time, today’s EURUSD forecast also suggests another scenario. Quotes may form a correction and test the 1.1730 support level. After a rebound, the pair could continue the uptrend, with the next upside target at 1.1900.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: upward
• Key resistance levels: 1.1810 and 1.1870
• Key support levels: 1.1730 and 1.1655

EURUSD trading scenarios for today

Main scenario (Buy Stop)

Consolidation above 1.1810 would confirm the continuation of the uptrend despite rising demand for safe-haven assets. In this case, the pair may move towards 1.1900 if risk appetite remains.

• Take Profit: 1.1900
• Stop Loss: 1.1790

Alternative scenario (Sell Stop)

A breakout below 1.1730 would indicate another corrective wave amid heightened geopolitical risks. Pressure from the USD may trigger a decline in quotes towards the next support level.

• Take Profit: 1.1655
• Stop Loss: 1.1760

Risk factors

Risks to growth are linked to mounting tensions in the Middle East, which is increasing demand for the dollar as a safe-haven asset. An additional factor could be monetary tightening by the Federal Reserve and an upward revision of interest rate expectations: this would limit the upside potential for the EURUSD pair.

Summary

The conflict in the Middle East remains the main trigger for the EURUSD rate. Expectations regarding interest rates from the Federal Reserve and the ECB are providing reciprocal support to their currencies. EURUSD technical analysis suggests growth towards 1.1870 after a correction.

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