EUR/USD hits 1.1600 after US-Iran talks sparks market volatilty

The EURUSD has started the week, appreciating over a 100 points after the US President, Donald Trump indicated that the US -Iran held a positive discussion over the conflict on Monday, thereby issuing a ceasefire for 5 days until they achieved a final resolution. This sent the markets into a frenzy as major assets benefited from risk-on sentiments at the expense of the US dollar.The Euro which had already ended the previous week at the back of a Hawkish rate hold by the ECB, gained over 0.4% upon the statement release, hitting 1.1600 price handle before retreating towards 1.1575.

In a latest development, the risk-on rally suffered a dent after Iran denied its involvement in the claimed negotiations by the US president. The US dollar index (DXY) quickly rebound off the previous week’s low at 98.98 to secure the 99.00 price handle. Oil prices dropped more than 10% on Monday but has since recouped some it’s losses and is trading back above a $100 per barrel as the situation around the strait of Hormuz has not changed despite claims of a negotiation.

On the data front, the markets continue to digest the outcome from the previous central bank decisions with the BOE and ECB maintaining a hawkish tone as they expect inflation to rise due to the ongoing escalation in the middle east which has affected the global economy.

Technical outlook

The outlook on the EURUSD is currently range bound with the Support at 1.1405 and Resistance at 1.1668. The price currently is at the mid-point of the range (1.1600) with possibility of a move towards 1.1668 following yesterday’s bullish close which engulfed the previous candle.

Traders should expect sell pressure should the price hit the current resistance level as the price had previously been rejected from that level. If the price fails to reverse from the 1.1688 resistance, this will confirm a breakout from the range and could see the price visit the 1.1700  with the next notable resistance around 1.1800 price handle.

In a scenario where the resistance holds then the range is confirmed and we could see the price move towards 1.1500 and 1.1450 for possible longs if the price rejects around the level.