Euro dips below 1.1750 amid mixed Economic Sentiment data, growing geopolitical risks

• EUR/USD retreats below 1.1750 after rejection at the 1.1790 area on Monday.
• Concerns about the resumption of hostilities in Iran are boosting the US Dollar on Tuesday.
• Mixed German ZEW Economic Sentiment data has failed to support the Euro.

The Euro (EUR) is heading lower against the Dollar (USD) on Tuesday, trading below 1.1750 at the time of writing, after another rejection at the 1.1790 area on Monday. Market concerns about the growing fragility of the US-Iran ceasefire are buoying the safe-haven US Dollar on Tuesday, while the mixed German ZEW Economic Sentiment data has failed to lift the Euro.

Institutional investors’ sentiment about the German economy has improved to -10.2 in May from -17.2 in April, against expectations of further deterioration, to -19.8, according to data released by the ZEW Institute. The sentiment about the current economic situation, however, has dropped to five-month lows at -77.8, from -73.7 in April, below the -77.5 market consensus.

Market sentiment soured on Tuesday following comments by US President Donald Trump affirming that the US-Iran ceasefire is on “life support”, while the CNN news channel, citing some of his aides, reports that the US President would be seriously considering resuming combat operations.

Later in the day, the focus will be on the US Consumer Price Index (CPI) figures. Consumer inflation is expected to have accelerated to a 3.7% yearly rate in April, its highest level since September 2023. Core inflation is seen rising to 2.7% year-on-year from 2.6% in March, all in all at levels significantly above the Federal Reserve’s (Fed) target rate of 2%.

Technical analysis: Next support is at the 1.1725 area

EUR/USD's technical picture shows bearish momentum building up slowly on the 4-hour chart. The Relative Strength Index (RSI) around 46 hints at fading bullish pressure, while the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory, suggesting that upside momentum is waning.

On the downside, the first notable support comes in at Friday's low, about 1.1725, ahead of a key support area between 1.1645 and 1.1675, which halted sellers several times in April. On the topside, the resistance area between 1.1790 and 1.1800 (May 1, 6, and 8 highs) is expected to test upside attempts ahead of April's peak, at the 1.1850 area.

(The technical analysis of this story was written with the help of an AI tool.)