rose on Monday after earlier declines, reaching 1.1516. It continues to draw support from the demand for safe haven amid the ongoing conflict in the Middle East, which has now entered its fifth week with no signs of resolution.
Tensions rose following Donald Trump's comments about the possible confiscation of Iranian oil and control of the export hub on Kharg Island. At the same time, the United States is increasing its military presence in the region and preparing for potentially prolonged operations. Forces aligned with Iran, including the Houthis in Yemen, have also joined the conflict.
Rising oil prices in this environment are amplifying inflation risks and reinforcing expectations for tighter Federal Reserve policy. The market is increasingly pricing in the possibility of a rate hike this year, marking a notable turnaround from previous expectations for rate cuts.
Investors' attention is now focused on US macroeconomic data. Labor market indicators will be released this week, including the JOLTS and ADP numbers, as well as the key March employment report due out on Friday.
Technical analysis
On the H4 chart, EUR/USD is forming a consolidation range around 1.1528. A break down is expected, with a continuation wave to 1.1404 as a short-term target, followed by a subsequent bounce to 1.1528. Technically, this scenario is confirmed by the MACD indicator: its signal line is below zero and pointing firmly downward, reflecting sustained bearish momentum and the possibility of the downtrend persisting.
According to the H1 chart, the market is forming the structure of the next descending wave towards 1.1440. After reaching this level, a bounce to 1.1535 is expected, potentially extending the move to 1.1647. Technically, this scenario is confirmed by the stochastic oscillator: its signal line is below 50 and pointing firmly towards 20.
Conclusion
EUR/USD remains firmly driven by geopolitical forces as the Middle East conflict enters its fifth week and shows no signs of de-escalation. The safe-haven appeal of the US dollar continues to dominate, while rising tensions and rising oil prices have shifted market expectations of rate cuts to the possibility of a Federal Reserve rate hike later this year. Technical indicators point to further decline in the near term, although this week's US labor market data could introduce volatility. Until there is a tangible change in the geopolitical landscape, it is likely to remain under pressure.
By RoboForex Analysis Department
Disclaimer: Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
