The Euro (EUR) continued its decline against the US Dollar (USD) for the third consecutive day, trading around 1.1680, as investor concerns over the potential resumption of hostilities between the US and Iran weighed heavily on risk appetite. This risk-off sentiment was exacerbated by reports of Iranian missile strikes on a UAE oil port hosting a military base and several vessels experiencing fires and explosions in the Strait of Hormuz. US President Donald Trump’s decision to free stranded vessels, with at least one ship crossing the waterway under US military escort, further heightened market anxiety. Oil prices surged, with West Texas Intermediate (WTI) at $101.40 and Brent at $111.58, approaching four-year highs, putting additional pressure on Eurozone economies reliant on crude imports and dragging the Euro lower [1].
The EUR/JPY pair also extended losses, trading around 183.80, as the Japanese Yen (JPY) stabilized following suspected intervention by Japanese authorities. Japanese Finance Minister Satsuki Katayama stated that Japan is prepared to act against speculative moves to limit Yen weakness. Commerzbank’s Volkmar Baur noted that authorities appeared to intervene near USD/JPY 157.00 after the pair briefly surged to 160.72. The stabilization of the Yen was further supported by these interventions, though underlying market sentiment remained cautious due to ongoing Middle East tensions and the threat to the US-Iran ceasefire. Iranian parliament speaker Mohammad Bagher Ghalibaf commented that the security of shipping and energy transit in the Strait of Hormuz has been undermined by US and allied actions, and that Iran has not yet fully responded [2].
Tokyo inflation data revealed that headline gains were driven entirely by energy prices, while core inflation slipped to a one-year low of 1.0%, down from 1.4%. Commerzbank highlighted that the conflict-related sentiment could keep core inflation subdued, reducing the likelihood of Bank of Japan (BoJ) rate hikes and maintaining pressure on the Yen. The Ministry of Finance appeared to remain active in the market during Japan’s Golden Week, aiming to stabilize the exchange rate at 157. The risk remains that the Iran conflict could further dampen sentiment in Japan, keeping core inflation low and casting doubt on further BoJ tightening [2][3].
Technical analysis for EUR/USD indicates growing bearish momentum, with the pair nearing a key support area between 1.1645 and 1.1675. A break below this level could confirm a bearish Head & Shoulders pattern, targeting the 1.1500 area. Momentum indicators such as the RSI and MACD are in bearish territory, suggesting continued downside risk. On the upside, resistance is seen at 1.1715 and higher at 1.1785–1.1795 and 1.1850 [1].
Looking ahead, market participants are awaiting comments from European Central Bank President Christine Lagarde, who may provide further details on the ECB’s monetary tightening plans. In the US, upcoming S&P Global and ISM Services PMIs, as well as April’s jobs reports, are in focus for additional market direction [1].
CONCLUSION
Escalating Middle East tensions and surging oil prices have driven risk aversion, pressuring both the Euro and the Yen. Japanese authorities' suspected intervention has temporarily stabilized the Yen, but weak core inflation and ongoing conflict risks continue to weigh on both currencies. Market participants remain cautious, awaiting further central bank guidance and key economic data releases.