rose to 1.1790 on Monday. The US dollar attempted to strengthen, but some of its rally was subsequently halted. Demand for safe-haven assets intensified over the weekend amid an escalating conflict in the Middle East.
The United States and Israel carried out attacks against Iran that resulted in the death of the country's supreme leader, Ayatollah Ali Khamenei. Reports also emerged about the effective closure of the Strait of Hormuz, a crucial route for global oil supplies. Tehran has responded with attacks on US targets in the region, fueling fears of a broader conflict.
Additional support for the dollar came from US producer inflation data. The January PPI rose more than expected, suggesting that companies are passing on tariff-related costs to consumers. This complicates the prospects for a possible rate cut by the Federal Reserve.
However, the market is still pricing in two 25 basis point rate cuts by the Federal Reserve this year. The prevailing sentiment is that volatility and geopolitical risks could eventually force the central bank to ease its monetary policy.
Technical analysis
On the EUR/USD H4 chart, the market is forming a consolidation range around the 1.1834 level. A break to the downside is expected, with a continuation of the wave to 1.1712 and the possibility of the trend extending further to 1.1590. Technically, this bearish scenario is confirmed by the MACD indicator, whose signal line is below zero and points strictly downwards, reflecting sustained bearish momentum.
According to the H1 chart, the market is forming the structure of the next downward wave towards the level of 1.1712. After reaching this level, a corrective rise is expected to 1.1768, followed by the start of a new bearish wave to 1.1650. Technically, this scenario is supported by the stochastic oscillator, with its signal line below 50 and pointing strictly downwards towards the 20 level.
Conclusion
The euro is facing a complex landscape, with flows to safe havens and geopolitical tensions in the Middle East initially boosting the US dollar, while better-than-expected US PPI data adds another layer of uncertainty to Federal Reserve policy. Although the market still anticipates rate cuts later this year, the immediate technical outlook for EUR/USD appears bearish, pointing to further bearish moves in the near term.
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.
