US Dollar Weakens Amid Geopolitical Optimism

EUR/USD rose to 1.1717 on Wednesday, snapping a three-day losing streak. Pressure on the US dollar stems from growing expectations that the US will reach a negotiated settlement with Iran, reducing demand for the USD as a safe-haven asset.

US authorities have confirmed that the truce, now in effect for nearly a month, remains intact. Military operations have concluded, and the focus is shifting towards securing shipping lanes in the Strait of Hormuz. Donald Trump also announced a pause in operations to facilitate the extraction of stranded vessels, providing room for negotiations.

Against this backdrop, oil prices have moderated, lowering inflation risks and reducing expectations of further policy tightening by the Federal Reserve.

Investor attention now turns to ADP private-sector employment data for April, which precedes Friday's key labour market report.

Technical Analysis

On the H4 chart of EUR/USD, the pair is trading within a consolidation range around 1.1742, currently extending down to 1.1729. A move lower below this level is likely, with potential downside towards 1.1690 and possibly 1.1636. Technically, this scenario is confirmed by the MACD indicator, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.

On the H1 chart, EUR/USD has reached the 1.1742 level and is now moving lower. A decline towards 1.1695 is likely, followed by a possible rebound to 1.1711 before a further move lower towards 1.1650 and potentially 1.1636. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line below 80 and pointing firmly downwards.

Conclusion

The US dollar has lost ground amid rising geopolitical optimism, as markets increasingly price in the likelihood of a negotiated settlement between the US and Iran. With the truce holding for nearly a month and military operations paused, the focus has shifted to securing shipping in the Strait of Hormuz, while moderating oil prices have eased inflation concerns and reduced expectations of Fed tightening. This has supported a rebound in EUR/USD after three days of declines. However, technical indicators suggest the broader bearish momentum for the pair may still be intact, with potential for further downside towards 1.1690 and 1.1636. The near-term direction will likely be influenced by US labour market data due later this week.

By RoboForex Analytical Department

Disclaimer:

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.