The EUR/USD pair has retraced to the 1.1400 region following a rejection at 1.1430 earlier on Wednesday. Recent tensions between the US and Iran, coupled with investor caution in anticipation of the forthcoming FOMC minutes, are exerting pressure on the pair. The technical picture shows a potential bearish flag formation. The Euro exhibits slight declines against the US Dollar on Wednesday, reverting to levels just above 1.1400 during the European trading session following a rejection at 1.1430. A new round of hostilities in Iran, coupled with investors’ cautiousness ahead of the release of the minutes from the latest Federal Reserve meeting, is restraining Euro bulls.
US President Donald Trump stated earlier on Wednesday that the ceasefire has concluded and that, in his opinion, the memorandum of understanding is no longer valid. These remarks come in the wake of a renewed exchange of hostilities between the United States and Iran, alongside the withdrawal of the US permission to export Iranian oil. The market reaction has been subdued thus far, as investors persist in perceiving these events as strategic moves to enhance leverage in the negotiation process. Beyond that, investors continue to exercise caution regarding substantial directional bets on the USD in anticipation of the release of the minutes from June’s Fed meeting, seeking additional clarity on the central bank’s monetary policy intentions.
EUR/USD trades at 1.1405, positioned at the lower boundary of the immediate ascending channel, which could potentially develop into a bearish flag formation. Momentum indicators on four-hour charts are exhibiting a bearish trend, as the Relative Strength Index (14) declines toward 44, while the Moving Average Convergence Divergence has retreated into slightly negative territory. This development indicates that bullish efforts are losing momentum.
A breach of the channel bottom and Tuesday’s low at 1.1400 would enhance the outlook for a bearish flag formation, which would be validated beneath the late June lows in the 1.1325-1.1330 range. The pattern’s measured target is positioned slightly beneath the low recorded in late May 2025, specifically at 1.1210. On the topside, Tuesday’s highs around 1.1459 and last week’s trading peak in the area of 1.1475 are likely to pose a challenge for bulls in the event of a positive reaction. An improbable breach of those levels would pave the way towards the mid-June highs, around 1.1620.