it holds near 1.1620 on Friday, and is on track to gain about 1% by the end of the week. The dollar is benefiting from safe-haven demand amid escalating conflict in the Middle East and rising crude oil prices.
The joint US-Israeli military operation against Iran continues into its seventh day. Tehran has responded with a new wave of missile and drone attacks against Gulf countries.
US President Donald Trump also stated that he would like to participate in the election of Iran's next leader. At the same time, he called the appointment of Mojtaba Khamenei, son of the late Supreme Leader, unlikely.
Rising oil prices have raised concerns about a new wave of global inflation, bolstering expectations that the Federal Reserve may delay interest rate cuts. Markets now anticipate the Fed's first rate cut no earlier than September or October, a downward revision from the previous July forecast.
This week, the dollar strengthened noticeably against the euro, reflecting the European economy's heavy dependence on oil imports from the Middle East.
Technical analysis
On the H4 chart, EUR/USD is forming a tight consolidation range around the 1.1600 level. The current structure suggests a high probability of a wave developing towards 1.1533, with room to extend further to 1.1500.
A break down from this range would open the door for the second half of the momentum to develop, with targets at least around 1.1400. Technically, this scenario is confirmed by the MACD indicator, whose signal line is below zero and points strictly downwards, reflecting sustained bearish momentum.
On the H1 chart, the market has completed a wave of growth targeting 1.1620, followed by a decline to form a consolidation range around 1.1600. A bullish break of this range could trigger another leg of growth to 1.1660, potentially extending to 1.1675, after which the broader downtrend towards 1.1500 is likely to resume.
A downside break of the range would trigger a continuation wave towards 1.1500, which could mark the completion of the third wave in the broader downtrend. This scenario is confirmed by the stochastic oscillator, whose signal line has moved away from 80, indicating a short-term bearish swing towards level 20.
Conclusion
EUR/USD remains under significant pressure as geopolitical tensions in the Middle East drive safe-haven flows into the US dollar, while lifting oil prices and stoking inflation concerns. The combination of delayed expectations of Fed rate cuts and Europe's particular vulnerability to energy disruptions has exacerbated the euro's weakness. With technical indicators pointing firmly to the downside, further declines appear likely, although short-term consolidation around key levels may precede the next leg of the downtrend.
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.
