The pair is currently at 1.1630, down by 0.3% as we approach the European session. While this drop might not seem significant on the surface, the price movements and charts from this week suggest otherwise.
Since mid-April, the euro has been fluctuating slightly against the dollar, trapped between the 200-day moving average acting as a lower limit and the 1.1800 level as the upper limit. With rising tensions in the U.S.-Iran situation, market dynamics are shifting, especially since President Trump’s recent meeting with Xi Jinping hardly seemed to promise any resolution.
Today’s decline in the EUR/USD has brought prices down to a five-week low. Should it drop below the technical threshold mentioned earlier, the fall might accelerate. Though the 200-day moving average has kept values stable in recent weeks, it seems to be losing effectiveness after overnight trading, which could lead to a deeper drop in the pair in the coming week.
With the aftermath of the Trump-Xi meeting, the U.S.-Iran conflict is back in focus, fueling concerns over ongoing tensions in the Middle East.
The session in Beijing led to a sideways movement in the markets, but there was perhaps a slight hope that Trump and Xi would unveil something impactful regarding Iran. Personally, I can’t help but feel a twinge of anticipation. Since the week started, there’s been chatter about:
“I wouldn’t be shocked if Trump seizes this opportunity to declare something like, ‘China is on board to help with the Iran crisis. Big news ahead!!!’ It fits his style to boost the stock market this way, even if China doesn’t fully back him up.”
However, that didn’t transpire. China quickly dismissed any such proposals, stating that there was “no point in continuing the conflict” and insisted that “the Strait of Hormuz must remain open for everyone’s benefit.” That was the gist of it—no solid commitments or promises of collaboration on mediation.
This definitely shapes the current market outlook as we head into the weekend.
Back to the EUR/USD, if there’s no hopeful news from the Middle East over the weekend, we might soon see a test of the 1.1500 level.
