Volatility in EUR/USD Eases, but Market Risks Remain

EUR/USD ended Friday at 1.1640 following significant volatility during the previous session. Pressure on the US dollar emerged after reports suggested that the US and Iran had reached preliminary agreements aimed at resolving the conflict. This helped ease market concerns over inflation and the need for further interest rate hikes.

According to media reports, Washington and Tehran are discussing a 60-day extension of the ceasefire alongside negotiations regarding Iran’s nuclear programme. The possibility of fully restoring shipping through the Strait of Hormuz is also reportedly under consideration.

However, a final agreement has yet to be approved. Reports indicate that Donald Trump has not formally endorsed the proposed terms of the deal.

Additional pressure on the dollar came from US PCE inflation data, which showed weaker price pressures than investors had anticipated. This reduced concerns about the impact of the energy crisis on inflation.

Despite this, markets still expect the Federal Reserve to keep interest rates at current levels for an extended period, at least over the coming quarters.

Technical Analysis

On the H4 EUR/USD chart, the pair is trading within a consolidation range around 1.1616, currently extending down to 1.1585. A move higher towards 1.1666 is likely, as a retest from below, followed by a decline towards 1.1555. The MACD indicator supports this scenario, with the signal line above zero and pointing firmly upwards, indicating continued bullish momentum.

On the H1 chart, EUR/USD has reached 1.1660 and is now pulling back towards 1.1626. A further rise towards 1.1666 may follow, before a possible decline towards 1.1555. The Stochastic oscillator confirms this scenario, with the signal line above 20 and pointing upwards towards 80.

Conclusion

EUR/USD stabilised after heightened volatility as easing geopolitical tensions and softer US inflation data weakened the dollar. Nevertheless, uncertainty surrounding US–Iran negotiations and expectations of prolonged high US interest rates continue to pose risks to the pair.

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.