The Euro (EUR) continued its decline against the US Dollar (USD), with the EUR/USD pair testing the 1.1600 support level amid escalating geopolitical tensions and surging oil prices [1]. Market sentiment deteriorated sharply on Wednesday following reports of US attacks on Iran and Iranian missile and drone strikes on Kuwait and Bahrain, which have strained an already fragile ceasefire in the Middle East [1]. Additionally, Al Jazeera reported an Israeli attack on the outskirts of Beirut, further intensifying risk aversion among investors [1].
Despite the release of positive economic data in the Eurozone, including upward revisions to the final HCOB Services Purchasing Managers’ Index (PMI) and a high Producer Prices Index (PPI), these developments were largely overshadowed by geopolitical concerns [1]. In the US, upcoming ADP Employment and ISM Services PMI data were expected to attract attention later in the day, while earlier in the week, strong JOLTS Job Openings and manufacturing activity data had bolstered expectations for a potential Federal Reserve rate hike before year-end, lending additional support to the USD [1].
Technically, EUR/USD traded at 1.1615 with a negative near-term outlook, as momentum indicators such as the 4-hour Relative Strength Index (RSI) remained below the 50 line and the Moving Average Convergence Divergence (MACD) signaled growing bearish pressure [1]. Key support is identified at 1.1570 (the May 21 low), with further downside targets at the 1.1505-1.1525 area (April's bottom) if the 1.1600 level is breached [1]. On the upside, resistance is seen at 1.1660, with further targets at 1.1720 (May 14 high) and 1.1790 (May peak) [1].
In terms of daily performance, the Euro was the strongest against the New Zealand Dollar, but weakened against the US Dollar by 0.14% [1].
CONCLUSION
The EUR/USD pair is under significant pressure due to heightened geopolitical risks and rising oil prices, which have overshadowed positive Eurozone economic data. With technical indicators pointing to further downside and market sentiment remaining risk-averse, the Euro may continue to face headwinds in the near term.