ended Friday at 1.1640 after significant volatility during the previous session. The pressure on the US dollar arose after reports suggested that the United States and Iran had reached preliminary agreements aimed at resolving the conflict. This helped ease market concerns about inflation and the need for further interest rate hikes.
According to media reports, Washington and Tehran are discussing an extension of the ceasefire for 60 days along with negotiations over Iran's nuclear program. The possibility of fully restoring shipping through the Strait of Hormuz is also reportedly being considered.
However, a final agreement has not yet been approved. Reports indicate that Donald Trump has not formally endorsed the proposed terms of the deal.
Additional pressure on the dollar came from US PCE inflation data, which showed weaker price pressures than investors had anticipated. This reduced concerns about the impact of the energy crisis on inflation.
Despite this, markets still expect the Federal Reserve to keep interest rates at current levels for an extended period, at least for the next few quarters.
Technical analysis
On the H4 EUR/USD chart, the pair is trading within a consolidation range around 1.1616, which currently extends to 1.1585. A bullish move towards 1.1666 is likely, as a retest from below, followed by a fall towards 1.1555. The MACD indicator supports this scenario, with the signal line above zero and pointing firmly upwards, indicating continued bullish momentum.
On the first half chart, EUR/USD has reached 1.1660 and is now retreating towards 1.1626. A further rise towards 1.1666 could follow, before a possible fall towards 1.1555. The stochastic oscillator confirms this scenario, with the signal line above 20 and pointing towards 80.
Conclusion
EUR/USD stabilized after increased volatility as easing geopolitical tensions and weaker US inflation data weakened the dollar. However, uncertainty surrounding US-Iran negotiations and expectations of prolonged high interest rates in the US continue to pose risks for the pair.
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.
