rose to 1.1717 on Wednesday, breaking a three-day losing streak. The pressure on the US dollar arises from growing expectations that the United States will reach a negotiated agreement with Iran, reducing demand for the dollar as a safe haven asset.
US authorities have confirmed that the truce, in force for almost a month, remains intact. Military operations have concluded and attention is now focused on securing sea routes in the Strait of Hormuz. Donald Trump also announced a pause in operations to facilitate the removal of stranded ships, leaving room for negotiations.
In this context, they have moderated, reducing inflation risks and reducing expectations of further policy tightening by the Federal Reserve.
Investors' attention now turns to ADP's private sector employment data for April, which precedes Friday's key labor market report.
Technical analysis
On the EUR/USD H4 chart, the pair is trading within a consolidation range around 1.1742, which currently extends to 1.1729. A move lower is likely below this level, with a possible drop towards 1.1690 and possibly 1.1636. Technically, this scenario is confirmed by the MACD indicator, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.
On the H1 chart, EUR/USD has reached the level of 1.1742 and is now moving lower. A drop towards 1.1695 is likely, followed by a possible bounce to 1.1711 before a further move lower towards 1.1650 and potentially 1.1636. Technically, this scenario is confirmed by the stochastic oscillator, with its signal line below 80 and pointing firmly downwards.
Conclusion
The US dollar has lost ground amid growing geopolitical optimism, as markets increasingly price in the likelihood of a negotiated deal between the US and Iran. With the truce holding for almost a month and military operations on pause, attention has shifted to securing shipping in the Strait of Hormuz, while moderating oil prices have eased concerns about inflation and reduced expectations of a Federal Reserve tightening. This has supported a rally in EUR/USD after three days of declines. However, technical indicators suggest that the pair's broader bearish momentum may remain intact, with potential for a further decline towards 1.1690 and 1.1636. Near-term direction will likely be influenced by US labor market data due out later this week.
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.
