The EUR/USD pair has drifted around the 17th figure for the second consecutive week, reflecting indecision among both buyers and sellers. Wednesday, April 22, marks the expiration of the two-week ceasefire between the US and Iran. Leading up to this event, market participants are hesitant to take large positions—neither for nor against the dollar. Current fundamental events are being played out by EUR/USD traders within the confines of the 17th figure, with little enthusiasm and, as they say, "without fire."

For example, on Tuesday, traders surprisingly reacted with restraint to the weak ZEW data, which showed a notable deterioration in German economic expectations. Despite this reaction, the report should not be entirely ignored, as it signals increasing pessimism regarding the prospects for the German economy and the Eurozone as a whole.

Looking ahead, it should be noted that the published data were significantly worse than even the most pessimistic forecasts amid ongoing tensions in the Middle East. The main indicators showed a sharp decline into the negative area.

For example, the index of economic expectations in Germany fell to -17.2 points in April, after declining to -0.5 points in March. This is the lowest level since the end of 2022. At the same time, the market expected a more moderate decline to -5.8. The indicator is in negative territory for the second month in a row. The German current situation index fell to -73.7 points (forecast: -70.5), down from 62.9 in the previous month.

The overall Eurozone ZEW indices reflect Germany's dynamics, but with even greater pessimism. The Eurozone business sentiment index fell to -20.4 points in April, down from -8.5 in March. Notably, the forecast had suggested a moderate recovery (to -3.6), making the actual result even more disappointing.

Moreover, the Eurozone current situation index has plummeted to -43.0, declining by 13 points this month.

The structure of the released report highlights the most vulnerable points of the German industry, particularly in export-oriented sectors: metallurgy (a 21-point decline), chemicals and pharmaceuticals (an 11-point decline), and machine engineering. For the first time in a long while, the construction sector has turned negative (-3.8), signaling the end of a period of relative stability in this area of the economy. The automotive industry remains in deep depression (-44.2), although the decline has slowed down slightly (which does not provide grounds for optimism).

Commenting on the report released on Tuesday, a ZEW representative directly linked the deterioration of key indicators to the consequences of the Middle Eastern conflict: rising energy risks, unstable external trade (deteriorating global demand), and increasing resource costs. The main risk has shifted from rising prices to a long-term deficit of energy resources, which undermines investment activity and reduces the effectiveness of government stimulus.

As a result, April's ZEW indices fell more than expected, which was unfavorable for the euro. In response to the release, the EUR/USD pair retreated from intraday highs (1.1792) and declined toward the mid-17 figure.

Traders' restrained reaction is due to the geopolitical agenda. According to CNN, the second round of negotiations between the US and Iranian delegations is scheduled for Wednesday (April 22). However, Tehran has yet to officially confirm its participation in these talks.

Sources from Axios report that disagreements within Iran's leadership regarding participation in negotiations have intensified. It is claimed that representatives of the so-called "pragmatic conservatives" (including the Speaker of the Iranian Parliament and the Foreign Minister) advocate for continuing the diplomatic track, while the leadership of the Islamic Revolutionary Guard Corps insists on a hardline stance (no negotiations until the US blockade of Iranian ports is lifted).

This internal conflict is the main reason why Iran has not yet officially confirmed whether its delegation will attend Wednesday's meeting. Trump, in turn, uses verbal pressure tactics, stating on social media about numerous violations of the ceasefire by Iran and threatening to resume hostilities. Similarly, Tehran issues messages of its readiness to defend itself and has "new cards on the battlefield."

Despite the belligerent statements from both sides, intrigue remains: past experience suggests a resolution may come at the very last moment. The direction of the EUR/USD price will depend on which way the scales tip. If the parties do sit down at the negotiating table and extend the temporary ceasefire, interest in risk will increase again in the market, at which point the pair may attempt to return to the 18 figure range. The resistance level here is 1.1850, corresponding to the upper line of the Bollinger Bands on the D1 timeframe. However, if further events unfold according to an escalation scenario, the pair may decline to the 16 figure range, where the support level is at 1.1650 (the middle line of the Bollinger Bands, coinciding with the Kijun-sen line on the D1 timeframe).