The EUR/USD exchange rate has experienced a consistent decline, reaching 1.1688 on Yesterday. The US dollar has reached ten-day highs, reflecting a stagnation in US-Iran peace negotiations, which has subsequently increased demand for the currency as a safe-haven asset. The Strait of Hormuz is currently in a state of effective closure. Tehran maintains its grip on this strategically significant waterway, with reports suggesting that it has previously commandeered two vessels in the region. Simultaneously, the US blockade of Iranian ports continues, leading to elevated energy prices and heightened inflationary risks. Meanwhile, US President Donald Trump indicated that the existing truce will persist indefinitely, as Washington anticipates a new peace proposal from Iran.
Investor apprehensions regarding US inflation persist, bolstering anticipations that the Federal Reserve will maintain interest rates at their current levels for the remainder of the year. Previously, Fed nominee Kevin Warsh underscored the significance of preserving the central bank’s autonomy from the White House. The market’s attention is now directed towards the upcoming weekly jobless claims and PMI data, which are expected to offer additional clarity regarding the trajectory of the US economy. On the H4 chart, EUR/USD is exhibiting trading activity within a consolidation range centered around 1.1736, currently extending downward to 1.1693. The pair is expected to decline towards 1.1680. The MACD indicator aligns with this scenario, as its signal line remains below zero and is directed firmly downwards, suggesting persistent bearish momentum.
On the H1 chart, EUR/USD is exhibiting a downward trajectory towards 1.1680. A corrective rebound to 1.1711 may ensue, prior to a subsequent decline towards 1.1620. The Stochastic oscillator corroborates this perspective, as its signal line remains beneath 20 and is directed decisively downward, indicating persistent short-term downside pressure. The EUR/USD pair has experienced a decline for the third consecutive session, influenced by geopolitical tensions and the strengthening of the dollar. The stagnation in US-Iran diplomatic negotiations, alongside Tehran’s dominance over the Strait of Hormuz and the persistent US blockade of Iranian ports, has sustained elevated energy prices and heightened concerns regarding inflation.
Trump’s suggestion that the truce will persist indefinitely, awaiting a new proposal from Iran, provides minimal immediate respite. As markets currently anticipate no Federal Reserve rate cuts for the remainder of the year and with significant US economic data on the horizon, the euro continues to face downward pressure. Technical signals indicate a likelihood of further decline towards 1.1680, and possibly extending to 1.1620 in the short term.