The EUR/USD pair has risen for three days in a row but is struggling to break above 1.1530 due to ongoing geopolitical tensions in the Middle East. President Donald Trump’s comments about delaying a decision on Iran have temporarily calmed market fears and provided a bit of support to the Euro. Nonetheless, the EUR/USD looks set for a weekly decline. Worries about the Iran-Israel conflict are driving more people to seek the US Dollar as a safe haven, affecting overall market risk. Rising oil prices are also putting pressure on the Eurozone economy, making it harder for the Euro to recover.

Economic Data and Inflation

The Federal Reserve has kept interest rates steady, expecting to lower them twice by 2025, while inflation expectations have gone up. The ECB President indicated a need for more regional trade within the EU to counteract global fragmentation effects. Recent data from France shows a stable Business Climate, but manufacturing sentiment has decreased. The EUR/USD is now operating within a declining channel after peaking earlier this month. Resistance is at 1.1530, while support levels are at 1.1445 and 1.1370. If it falls below these levels, further downward pressure may follow. The Euro’s value is closely tied to inflation data, economic health, and trade balance. As the EUR/USD pair stays below the 1.1530 resistance level, it reflects the market’s uncertainty amid global political issues. Traders have likely noticed how news about conflict in the Middle East quickly affects the pair. Trump’s recent indication that a decision about Iran can be postponed has momentarily eased risk concerns, but this is not a long-term solution. The Euro’s recent gains show signs of weakening due to external uncertainties and internal challenges. Given the pair’s performance this week and last, recent upward movements should be seen as temporary corrections rather than signs of lasting momentum. The demand for the Dollar is driven by more than just political issues. Rising commodity prices are also a factor. Increased oil prices contribute to inflation and impact Europe’s trade margins, especially in manufacturing. This creates a challenge: rising costs and decreased confidence in future earnings. France’s lower manufacturing sentiment confirms this trend.

Federal Reserve and Market Sentiment

The Federal Reserve’s choice to maintain interest rates, along with a slightly dovish outlook for the future, adds complexity to the situation. While the expected rate cuts by 2025 could be seen as positive for risk assets, rising inflation expectations complicate that perspective. The Dollar could benefit if inflation expectations remain high and the Fed feels less able to cut rates. Meanwhile, ECB President Lagarde is focusing on boosting trade links within the EU, suggesting a longer period of slow global trade, which aligns with the current economic landscape in Germany and France. From a technical viewpoint, the trading channel is tight. For short-term traders, the resistance at 1.1530 is crucial. Below that, watch 1.1445 for retracements. If that cracks, attention will shift to 1.1370, where previous buyers may return, but only if conditions are favorable. Daily momentum indicators have cooled off, so unless there are significant macro surprises, market behavior might become more erratic rather than confirming trends. Changes outside the established range could lead to sharp reactions, particularly with increased trading volume. We’re not only looking at price movements but also assessing the underlying market sentiment. No single news item is likely to drive a sustained change unless it is linked to broader economic trends. Oil prices are particularly important—not due to their volatility but because they steadily undermine the Eurozone’s economic stability as prices remain high. Therefore, energy and inflation data should be closely monitored in the coming days. Upcoming sentiment surveys and trade data are also important—not just for unexpected results, but to see how well they align with current market expectations. In summary, as we head into the next few weeks, it’s crucial to be aware of immediate levels and be ready to adapt if conditions worsen. Quick moves in either direction may happen, but any trades need confirmation first—whether through stronger data from Europe or a clear shift in the Fed’s tone. Adjust hedges appropriately. Create your live VT Markets account and start trading now.

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