EUR/USD has declined steadily, falling to 1.1688 on Thursday. The US dollar has returned to ten-day highs amid a lack of progress in US-Iran peace talks, boosting demand for the currency as a safe-haven asset.
The Strait of Hormuz remains effectively closed. Tehran continues to control this strategically vital waterway, with reports indicating it has previously seized two vessels in the area. At the same time, the US blockade of Iranian ports persists, contributing to higher energy prices and increasing risk for inflation.
Meanwhile, US President Donald Trump stated that the current truce will remain in force indefinitely, as Washington awaits a new peace proposal from Iran.
Investors remain concerned about US inflation, reinforcing expectations that the Federal Reserve will keep interest rates unchanged for the remainder of the year. Earlier, Fed nominee Kevin Warsh emphasised the importance of maintaining the central bank’s independence from the White House.
Market focus now shifts to weekly jobless claims and PMI data, which should provide further insight into the outlook for the US economy.
Technical Analysis
On the H4 chart, EUR/USD is trading within a consolidation range around 1.1736, currently extending down to 1.1693. The pair is likely to move lower towards 1.1680. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, indicating sustained bearish momentum.
On the H1 chart, EUR/USD is developing a move lower towards 1.1680. A corrective rebound to 1.1711 may follow, before a further decline towards 1.1620. The Stochastic oscillator confirms this view, with its signal line below 20 and pointing firmly downwards, suggesting continued short-term downside pressure.
Conclusion
EUR/USD has declined for a third consecutive session amid geopolitical tensions and a stronger dollar. The lack of progress in US-Iran peace talks, combined with Tehran’s control over the Strait of Hormuz and the ongoing US blockade of Iranian ports, has kept energy prices elevated and inflation risks in focus. Trump’s indication that the truce will remain in place indefinitely, pending a new proposal from Iran, offers little immediate relief. With markets now pricing in no Fed rate cuts this year and key US data approaching, the euro remains under pressure. Technical signals suggest further downside towards 1.1680, and potentially to 1.1620 in the near term.
