Euro Walks into a Trap. Forecast as of 10.04.2026 | LiteFinance
Greed often backfires. Chasing profits, investors rushed into EUR/USD on hopes of peace in the Middle East. However, the decline in oil prices is misleading, and the ECB is unlikely to raise rates. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The EUR/USD increase may be deceptive.
- The oil market remains in deficit.
- The IMF urges central banks to keep rates unchanged.
- If US inflation accelerates, consider selling EUR/USD, targeting 1.164 and 1.162.
Euro Fundamental Forecast for Today
Don’t get ahead of yourself. Traders had been waiting for signs of de-escalation in the Middle East to buy equities and EUR/USD. They were relying on past market reactions, including last year’s response to US tariffs. In reality, however, they have walked into a trap. The Strait of Hormuz remains closed and under Iran’s control. Both sides accuse each other of violating the ceasefire, and talks between Washington and Tehran are far from guaranteed to lead to a peace deal.
Greed can be costly. It’s hard to say what’s worse: chasing a late EUR/USD rally or getting caught in a premature one. The US dollar remains heavily tied to oil. Their 30-day correlation is nearing record highs last seen when Washington imposed its steepest tariffs since the 1930s.
Dollar-Oil Correlation
Source: Bloomberg.
However, the drop in Brent prices after news of a two-week US–Iran ceasefire is misleading. Brent may be trading below $100 a barrel in the futures market, but the physical oil market is still under strain. About 10 million barrels per day remain off the market because the Strait of Hormuz is still closed. Traffic through this vital route has also collapsed, with fewer than a dozen tankers passing through, compared with around 135 before the conflict.
According to ANZ Research, even if the Strait of Hormuz fully reopens, only 2–3 million bpd would return to the market. That’s why spot oil prices are still holding in the $140–150 range. The supply disruption is real, and US gas prices are unlikely to fall. According to Gulf Oil, only a decrease in WTI below $90 per barrel would push gasoline prices below $4 per gallon.
US Inflation
Source: Wall Street Journal.
This means US inflation will keep rising. Even before the conflict in the Middle East, the PCE index increased by 0.4% month-on-month and 2.8% year-on-year. Economists surveyed by The Wall Street Journal expect CPI to rise by 0.4% in March and by 3.3% from a year earlier. This would likely keep the Fed from cutting rates anytime soon. The IMF is also urging other central banks to keep rates unchanged while they assess the consequences of the conflict.
EURUSD Trading Plan for Today
If the Fed and the ECB stay on a similar policy path and oil prices stabilize, the US dollar may get a chance to rebound. A pickup in US inflation in March would be a reason to sell EUR/USD with targets at 1.164 and 1.162.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of EURUSD in real time mode
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