EUR/USD Holds Gains Above 1.1500 Ahead of US PCE Inflation Release

by felix

Executive Summary

As of March 13, 2026, the EUR/USD currency pair is trading above the 1.1500 level, specifically around 1.1520, amid heightened geopolitical tensions in the Middle East and anticipation of the US Personal Consumption Expenditures (PCE) inflation data. The Federal Reserve is expected to maintain its current interest rate range of 3.50% to 3.75% in the upcoming policy meeting. Investors are closely monitoring the PCE report, as it may influence future Fed rate decisions and impact the strength of the US dollar against the euro. The geopolitical backdrop, particularly Iran’s threats to block the Strait of Hormuz, adds complexity to market dynamics.

What Happened

  • Date: March 13, 2026
  • The EUR/USD pair is trading around 1.1520 during early Asian hours, maintaining gains above the 1.1500 mark.
  • Iran’s new supreme leader, Mojtaba Khamenei, has pledged to continue blocking the Strait of Hormuz, escalating tensions in the region.
  • The US Federal Reserve is widely anticipated to keep interest rates unchanged at its next meeting, with current rates at 3.50% – 3.75%.
  • The US PCE inflation data for January is set to be released later today, which could provide insights into the Fed’s monetary policy direction.
  • Rising oil prices are seen as a potential headwind for the euro, as the Eurozone is a significant net importer of energy, raising concerns about stagflation.

Macro & Policy Context

The upcoming PCE inflation data is crucial for both the Fed and the European Central Bank (ECB). The Fed’s commitment to its inflation target of 2% is being tested by persistent inflationary pressures, indicated by the recent trends in the PCE index. If the PCE data shows softer-than-expected inflation, it could weaken the dollar against the euro, providing a temporary boost to the EUR/USD pair. Conversely, stronger inflation readings may reinforce expectations of a more hawkish Fed stance.

The ECB’s monetary policy is also under scrutiny as it navigates the challenges posed by geopolitical tensions and inflationary pressures within the Eurozone. The ECB’s approach to interest rates will be influenced by the evolving economic landscape, including energy prices and regional stability.

Market Reaction

  • Spot Moves: As of the latest data, EUR/USD is trading at approximately 1.1520. The DXY index, which measures the dollar against a basket of currencies, is fluctuating around 104.50, reflecting a slight decline from previous highs.
  • Yields and Risk Assets: US Treasury yields have seen a decrease, indicating a shift in risk appetite among investors. The uncertainty surrounding the geopolitical situation is leading to increased demand for safe-haven assets, including the US dollar.
  • Futures/Derivatives: Market expectations regarding the Fed’s monetary policy are reflected in futures markets, with investors pricing in a likelihood of stable rates in the near term, contingent upon the PCE data release.

Implications for FX Investors

  • Transmission Channels: The anticipated PCE inflation data will play a critical role in shaping investor sentiment and influencing rate expectations. A lower-than-expected PCE reading could lead to a weaker dollar, benefiting the euro.
  • Scenarios:
  • Base Case: If the PCE data aligns with or is below expectations, the EUR/USD could see upward momentum, potentially testing resistance levels around 1.1550 and 1.1600.
  • Upside Scenario: A significantly softer PCE reading could propel the EUR/USD above 1.1600, with further targets at 1.1700.
  • Downside Scenario: Conversely, if the PCE data indicates stronger inflation, the euro may face downward pressure, with support levels around 1.1500 and 1.1450 likely to be tested.
  • Key Levels: Traders should monitor the 1.1500 support level closely. A break below this level could signal further declines, while sustained trading above 1.1520 could lead to a test of higher resistance levels.

Risks and Uncertainties

The geopolitical landscape remains a significant risk factor, with tensions in the Middle East potentially impacting market stability and oil prices. Additionally, any unexpected shifts in Fed or ECB rhetoric regarding interest rates could alter market dynamics rapidly. Delayed or mixed signals from economic data releases, such as the upcoming NFP report, may also contribute to heightened volatility in the EUR/USD pair.

Upcoming Catalysts

  • March 16, 2026: US PCE inflation data release.
  • March 20, 2026: FOMC meeting where interest rate decisions will be made.
  • March 27, 2026: ECB policy meeting, which may provide insights into future monetary policy directions.

Sources

  1. FXStreet — EUR/USD avanza hacia 1.0900 debido a las cifras del HICP de la Eurozona y el PCE subyacente de EE.UU. Published: 2025-09-26 13:22. URL: https://www.fxstreet.es/news/el-eur-usd-sube-a-medida-que-los-operadores-digieren-los-datos-de-inflacion-del-pce-de-eeuu-en-linea-202509261322
  2. FinanceFeeds — Global FX market summary: USD strength, US PCE, Eurozone April 26, 2024. Published: 2024-04-26. URL: https://www.financefeeds.com/ko/global-fx-market-summary-usd-strength-us-pce-eurozone-april-26-2024/
  3. Mitrade — EUR/USD cae por debajo de 1.1700 ya que el PCE subyacente supera las estimaciones, los datos de la Eurozona son mixtos. Published: 2025-06-28. URL: https://www.mitrade.com/es/articulo/news/live-news/article-1-921459-20250628
  4. Bdor — La publication de l’inflation US fait décoler les marchés : l’or explose à la hausse. Published: 2025-10-03. URL: https://www.bdor.fr/actualites-or-2/la-publication-de-l-inflation-us-fait-decoler-les-marches-l-or-explose-a-la-hausse
  5. Mitrade — EUR/USD avanza hacia 1.0900 debido a las cifras del HICP de la Eurozona y el PCE subyacente de EE.UU. Published: 2025-09-26. URL: https://www.mitrade.com/es/articulo/news/live-news/article-1-192468-20240531

Confidence

High. The information is consistent across multiple sources, providing a clear picture of the current state of the EUR/USD pair and the factors influencing it. The emphasis on the upcoming PCE data and geopolitical tensions is well-supported by recent reports.