EUR/USD Price Forecast: Trump’s intervention in the Middle East spur risk aversion

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1470

US President Donald Trump launched attacks on Iran over the weekend.
Iranian authorities decided to close the Strait of Hormuz.
EUR/USD pressures the 1.1450 region, aims for a bearish breakout.

The EUR/USD pair gapped lower at the weekly opening, finding intraday buyers in the 1.1450. The following advance was enough to fill the gap, with the pair resuming its decline afterwards and trading near a fresh low of 1.1453. Fears arose amid United States (US) President Donald Trump's intervention in the Middle East crisis. The US attacked critical Iranian nuclear locations at Fordow, Natanz and Isfahan over the weekend, with Trump reporting the US “completely and totally obliterated” key nuclear enrichment facilities.

As a result, Iranian authorities decided to close the Strait of Hormuz, the only sea passage from the Persian Gulf to the open ocean, critical as a large portion of the world’s oil and gas passes through it. Tehran's Major General Kowsari tweeted: “The Parliament has reached the conclusion that the Strait of Hormuz should be closed, but the final decision in this regard lies with the Supreme National Security Council.”

Other than that, the Hamburg Commercial Bank (HCOB) released the preliminary estimates of the Eurozone Purchasing Manager’s Indexes (PMI), which came in below the market expectations, but matched May’s figures. Manufacturing output held steady at 49.4 vs expectations for an uptick to 49.8. The services index printed at 50, meeting the forecast and better than the previous 49.7. Finally, the Composite PMI printed at 50.2, slightly below the 50.5 anticipated by market players.

The American session will bring the US S&P Global PMIs for the same period, and a couple of central bank speakers.

EUR/USD short-term technical outlook

Meanwhile, the daily chart for the EUR/USD pair shows that it continues to lose momentum, although a steeper decline is not yet in sight. The pair rests just above a mildly bullish 20 Simple Moving Average (SMA), providing dynamic support at around 1.1440. The longer moving averages remain far below the shorter one, with the 100 SMA still heading firmly north. Technical indicators, in the meantime, ease towards their midlines, but with limited downward strength.

In the near term, and according to the 4-hour chart, EUR/USD is neutral-to-bearish. The pair struggles to hold above a mostly flat 100 SMA, while a mildly bearish 20 SMA contains advances. Finally, the Momentum indicator seesaws directionless around its 100 line, while the Relative Strength Index (RSI) indicator hovers around 42, favoring another leg lower without confirming it.

Support levels: 1.1425 1.1380 1.1335

Resistance levels: 1.1530 1.1580 1.1620

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

GBP/USD back to 1.3250, down modestly for the day

GBP/USD now comes under fresh downside pressure and recedes toward the mid-1.3200s on Tuesday, partially reversing the optimism seen at the beginning of the week. Meanwhile, Cable’s bearish tone follows the resumption of the upside traction in the Greenback, always amid the sharp rally in USD/JPY.

EUR/USD off tops, back to 1.1400

EUR/USD now loses some momentum and recedes from the area of recent daily tops, revisiting the 1.1400 neighbourhood in the latter part of Tuesday session. The pair’s daily decline comes in response to the resurgence of some buying interest in the US Dollar.

Gold clings to daily gains beyond $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Ripple defends critical support, Stellar extends recovery

Ripple (XRP) trades around the key $1.00 psychological level, consolidating as the token awaits its next directional catalyst. Stellar (XLM) extends its recovery above $0.178 after posting modest gains at the start of this week.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.