EUR/USD Price Forecast: Euro Cracks 1.1700 as Dollar Roars Back; 1.1650 Is the Bull-Bear Line Into FOMC, ECB

The single currency has lost its grip on the 1.1700 handle and is now trading with a defensive tone heading into the most consequential 72-hour central-bank window of the second quarter. EUR/USD last printed 1.1695 in the European session, hitting a fresh two-week low after rejecting from an intraday peak of 1.1754 — just shy of the 1.1769 horizontal barrier — and surrendering ground that buyers had clawed back during the recovery from the 1.1410 swing low set earlier in April. The pair has slipped beneath both the 1.1700 to 1.1710 pivot zone and the upward trendline that had defined the bullish recovery since late March, and the structural read on the daily and four-hour charts has shifted from cautiously bullish to genuinely two-sided. The catalyst stack is unforgiving: the U.S. Dollar Index (DXY) sits at 98.67 with intraday highs near 98.74, the U.S. 10-year Treasury yield is parked at 4.374% on a three-week high, the Strait of Hormuz remains shut into the second month of the Iran war, and the Federal Reserve plus the European Central Bank are both delivering policy decisions inside a 24-hour window. For traders running EUR/USD risk into Wednesday and Thursday, the question is no longer whether the bullish bias from late April still holds, but whether the 1.1650 support cluster can absorb the dollar bid before the central-bank cluster forces the next directional move.

The Macro Stack Defining EUR/USD Right Now

The dollar's renewed strength is not a sentiment shift, it is a real-rate event. U.S. CPI is running at 3.3% year-on-year for March, driven primarily by energy passthrough from the Hormuz shutdown, while underlying inflation has actually eased a touch to 2.6%. That dual reading — sticky headline, easing core — gives the Fed cover to hold the policy rate at 3.50% to 3.75% on Wednesday, with the CME FedWatch tool showing 99.5% probability of an unchanged outcome. The market is no longer pricing aggressive easing for 2026; if anything, the curve is starting to entertain the possibility of further hikes if the Hormuz inflation passthrough does not abate. That repricing is the single biggest variable working against EUR/USD bulls right now.

The structural setup is mirrored in the U.S. yield complex. The 10-year benchmark has climbed back to 4.374%, the 2-year and 5-year are dragging higher in sympathy, and real yields are mechanically widening because nominal yields are climbing faster than inflation expectations. That arithmetic supports the dollar through both the carry channel and the safe-haven channel simultaneously, an unusual combination that gives DXY momentum on multiple fronts. WTI crude is parked at $100.31 on a 4.09% session gain, and Brent is at $111.76, up 3.26% — both confirming the Hormuz disruption is an active, ongoing inflation engine rather than a fading shock. The U.S.-Iran negotiations remain stalled after Trump dismissed Tehran's offer to reopen the Strait in exchange for lifting the U.S. naval blockade, and Foreign Ministry spokesperson Esmaeil Baqaei confirmed no meetings are currently scheduled between Washington and Tehran. That stalemate keeps the safe-haven bid in the dollar intact for the foreseeable future.

The ECB Setup: Wait-and-See Posture as Inflation Climbs

The European Central Bank decision arriving this week sits at the heart of the EUR/USD trajectory, and the institutional read is uniformly cautious. The ECB is widely expected to leave the deposit rate unchanged at 2.00% at the April 29-30 meeting, with policymakers adopting a defensive wait-and-see stance as they assess the impact of rising energy prices on the eurozone inflation profile. Headline eurozone inflation is tracking at the 2.0% to 2.2% range and is projected to climb modestly in the coming months on energy passthrough, while core inflation pressures have not yet broadened decisively across the basket. That gives Lagarde and the council the political room to defer action without forcing a hawkish pivot.

The strategic question is whether the ECB ends up further behind the Fed on policy normalization, or whether it accepts the energy-driven inflation bump as a transitory cost of the Hormuz war. Markets are currently pricing in two ECB rate hikes for 2026, but the bar to deliver those hikes is high — the eurozone is growing at a modest 1.1% to 1.3% annualized clip, and any sign of demand destruction from energy costs will reinforce the case for patience rather than action. Eurozone inflation and Q1 GDP figures release Thursday immediately ahead of the rate decision, and the data will set the tone for Lagarde's press conference. A hot inflation print combined with weaker GDP would put the ECB in the worst possible position — stagflation-lite — and that is the scenario that historically drives euro weakness against the dollar through the rate-differential channel.

The Fed Setup: Powell's Hawkish Hold and the Succession Question

The Federal Reserve will hold rates at 3.50% to 3.75% on Wednesday, but the framing of the hold is what matters for EUR/USD. Powell is expected to emphasize a wait-and-see approach, weighing rising inflation from energy costs against the growth and employment risks generated by the conflict's spillovers. The trade-off is genuinely difficult: keeping rates elevated for longer protects against the Hormuz inflation passthrough but risks tightening into a slowdown; easing too early relieves pressure on growth but cedes credibility on the inflation mandate. The press conference will be parsed sentence by sentence for any hint of which way the Fed is leaning, and the dollar reaction will turn on whether Powell sounds more concerned about inflation or more concerned about growth. The default expectation is hawkish-tilted hold, and that is what is currently priced into DXY at 98.67.

Layered onto the policy decision is the institutional question of Fed leadership. Powell's term as Chair ends on May 15, although he remains on the Board of Governors until 2028. Senator Thom Tillis stated Monday night that there is a rational basis for Powell to remain on the board through the inspector-general review of the Fed construction project and the DOJ appeal of the federal-court ruling against the probe's subpoenas. Kevin Warsh is progressing through the confirmation process as a potential successor, and the political layer around the transition is now part of the dollar's term premium. Any signal Wednesday on whether the handoff is orderly or contested flows directly into 10-year yields and through to EUR/USD via the rate-differential mechanism. A clean transition is dollar-supportive; a contested one introduces volatility that historically benefits the euro on relative grounds.

Bank of England Read: Sticky UK Inflation Adds a Cross-Vol Layer

The Bank of England is in the same week's central-bank cluster, set to decide on May 1. UK CPI ran at 3.3% year-on-year in March, with core climbing to 3.1% — both on or above target. Unemployment ticked up to 4.9%, and the BoE is balancing the energy-driven inflation surge against weakening labor-market signals, with the policy rate expected to hold at 3.75%. UK growth remains relatively decent versus the eurozone, but the inflation-employment trade-off is harder, and any hawkish surprise from Threadneedle Street would push GBP/USD higher and pull EUR/GBP lower, which is a third-order pressure on the EUR/USD rate. GBP/USD is last quoted near 1.3508, sitting just above its rising trendline with deep support at 1.3486 and 1.3435, and any cross-pair volatility from the BoE outcome will spill into euro positioning. For traders running EUR/USD on a directional view, the cross-vol layer from the BoE adds noise that should be modeled into the position-sizing rather than ignored.

Bank of Japan Already Tilted Hawkish: A Global Conditions Tightener

The BOJ already moved earlier Tuesday with a 6-3 split decision to hold at 0.75%, but three dissenting members voted for an outright hike to 1.00%, citing Hormuz-driven supply-side risks. The BOJ revised its FY2026 core inflation outlook sharply higher to 2.8% from 1.9%, while cutting growth to 0.5% from 1.0%. That hawkish dissent at the world's most patient central bank is the cleanest signal yet that energy-driven inflation is forcing every major policymaker off the sideline, and the global conditions tightening that follows is dollar-supportive on the margin. The euro has been gaining 0.06% versus the dollar on the day per the FXStreet currency heat map, but is losing 0.30% against the yen — an asymmetric move that confirms the Japanese hawkish tilt is the day's other major macro signal.

EUR/USD Daily and Four-Hour Chart Map: Where the Levels Actually Sit

The technical structure on EUR/USD has shifted from cautiously bullish to genuinely two-sided over the past 48 hours. On the four-hour timeframe, the pair recovered from the 1.1410 low to peak at 1.1850, then eased back to test the 200-period SMA at 1.1680. Price has been holding above the near-term rising trendline and the 200-period SMA, which had kept the bullish bias intact, but the rejection at 1.1850 and the failure to clear 1.1769 has weakened the structure. The 100-period and 200-period moving averages had been reclaimed during the rally, and price was rejecting the 50-period MA earlier in the session, opening up a potential retest of the 100-period MA at 1.1647.

The Relative Strength Index on the four-hour timeframe has cooled to roughly 54, suggesting there is still runway before overbought conditions activate, but the slowing momentum profile combined with the lower-high pattern on the daily print is the warning that the bullish leg is fading rather than re-accelerating. The MACD line is marginally positive and above its signal, which is structurally constructive but not impulsive — the kind of reading that usually precedes either a consolidation or a structural breakdown rather than a breakout extension.

The hourly chart adds further granularity. EUR/USD hit 1.1754 before easing lower, with the H1 200-period MA acting as dynamic support that has just been rejected. A bullish engulfing candle or long-wick rejection near the 1.1716 to 1.1700 area would signal that buyers are ready to defend the intraday trend; absent that confirmation, the structure tilts toward a stop-run lower. The H1 RSI has cooled from overbought to a more neutral reading, leaving room for a drop toward 50 before any rebuild.