fell slightly on Tuesday, retreating to 1.1762. The US dollar has regained popularity as a defensive asset after US President Donald Trump questioned the sustainability of the truce with Iran and rejected Tehran's latest peace proposal.
Trump also plans to call a meeting with his national security team to discuss a possible resumption of military operations and a review of plans to escort commercial ships through the Strait of Hormuz.
The ongoing conflict continues to keep prices elevated, fueling inflationary pressures and expectations that interest rates can remain high longer to contain price pressures.
Investors are now turning their attention to U.S. inflation data for April, which is expected to indicate how the conflict with Iran is impacting the economy and help guide potential decisions by the Federal Reserve.
An additional market driver is the meeting scheduled for later this week between Donald Trump and Chinese President Xi Jinping, which will likely focus on trade relations and the development of artificial intelligence.
Technical analysis
On the H4 chart, EUR/USD is trading within a consolidation range around 1.1755, with a possible drop towards 1.1688. At the same time, a bullish move towards 1.1818 remains possible, with a further rise to 1.1870. This scenario is supported by the MACD indicator, with its signal line above zero and pointing firmly upwards, indicating continued bullish momentum.
In the first half chart, EUR/USD reached 1.1786. A drop towards 1.1740 is likely, followed by a possible rebound to 1.1760 and a further rise towards 1.1818. This scenario is confirmed by the stochastic oscillator, with its signal line near 20 and pointing firmly upwards.
Conclusion
EUR/USD remains sensitive to geopolitical developments in the Middle East and upcoming discussions between the United States and China. Strong inflation data could support the US dollar, while positive diplomatic progress could ease pressure on the pair and support further euro gains.
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.
