EUR/USD continues to decline as the US Dollar strengthens amid heightened risk aversion
FUNDAMENTAL OVERVIEW:
The EUR/USD pair reversed a four-day winning streak on Friday, pulling back from nearly four-year highs above 1.1600 to trade just below the 1.1500 mark at the time of writing. The retreat follows heightened risk aversion sparked by Israel’s attack on Iran, which prompted investors to seek safety in the US Dollar (USD).
Geopolitical tensions have intensified after Israel targeted Iran’s nuclear facilities and killed several senior officers of the Revolutionary Guard. In response, Iran launched a drone strike and withdrew from nuclear negotiations with the US, amplifying fears of a broader regional conflict and rattling global markets.
This flight to safety has significantly boosted demand for the US Dollar, which had previously been trading near multi-year lows amid rising expectations of a Federal Reserve rate cut in September—expectations fueled by softer US inflation data.
On Thursday, the US Producer Price Index (PPI) showed weaker-than-expected price pressures for May, following this week’s subdued Consumer Price Index (CPI) report. Together, the data have helped ease concerns over inflationary risks from tariffs, at least for now.
Meanwhile, the Euro came under additional pressure after Eurozone industrial production dropped by 2.4% in April—its steepest decline in nearly two years. The fall surpassed the market’s forecast of a 1.7% contraction and reversed March’s 2.4% gain, reinforcing bearish sentiment toward the Euro.
READ MORE – Smarter Trading in 2025: Why MetaTrader Is Outdated
EURUSD TECHNICAL ANALYSIS CHART:
Technical Overview:
EUR/USD is trading within a up channel.
EUR/USD is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 1.1565
Immediate support level: 1.1436
HOW TO TRADE EURUSD
Following a period of sustained and rapid ascent, the EUR/USD pair encountered resistance, resulting in a substantial downward retracement. The price is currently moving towards an established support area, and if it respects and remains above this level, it has the potential to continue its upward trajectory.