12.05.202604:30 Forex-elemzések és áttekintések: EUR/USD Overview. May 12. Iran and the US Again Failed to Find Common Ground

The EUR/USD currency pair traded with ultra-low volatility on Monday, despite a turbulent geopolitical backdrop. On Monday morning, it became known that Iran and the US had once again failed to reach an agreement on a long-term peace. Donald Trump stated late Monday night that Iran's proposal was absolutely unacceptable, while Tehran claimed that the US proposal amounted to capitulation. Thus, neither Tehran accepted Washington's viewpoint nor Washington accepted the other's. How close the parties are to arriving at a real agreement remains unclear. However, if Washington insists on 15 years without uranium enrichment while Iran is only willing to agree to 12 years, the situation remains tense. It is entirely different if Iran has no intention of abandoning enriched uranium, while the US demands complete denuclearization. All traders can do is speculate about these discussions. The parties may be at opposite ends of the spectrum in negotiations, or negotiations may indeed be approaching an agreement.

Late Monday, the dollar rose 38 pips, but during the day it completely lost those 38 pips and then some. In other words, the market reacted to the new diplomatic failure between Iran and the US, which once again raised the likelihood of war resuming in the Middle East, with a 38-pip move. This is consistent with what we have discussed in recent articles. Individual events or geopolitical news may still provoke market reactions, but the impact of geopolitics continues to weaken. Now we see movements of 38 pips, rather than the 100 pips we experienced a couple of months ago.

It is worth noting that the market reacted not only to another failure in negotiations but also to a new ceasefire violation. Over the weekend, American military ships struck Iranian tankers, and Iran stated that its missiles were ready to strike American military bases and facilities at any moment. Additionally, Iranian rockets and drones were again launched towards the UAE. Thus, it cannot be said that the package of geopolitical events over the weekend was weak or unconvincing. The market is simply no longer responding with mass purchases of the US dollar. Those who wanted to escape risks have already done so. Those who wanted to protect their capital have already taken action. Thus, we continue to believe the US dollar will decline further.

At present, the geopolitical backdrop is merely holding the market back from making new sales of the dollar or purchases of the euro. Traders understand that the war in the Middle East could resume at any moment. What more is to be expected when there is no progress in negotiations and both sides regularly violate the ceasefire terms? However, neither Iran nor the US seems eager to start a new full-scale war. Therefore, they continue to exchange fire in the Persian Gulf region while also hoping for concessions from the opposing side in negotiations. But as we can see, no one wants to concede, which is entirely predictable.

The average volatility of the EUR/USD currency pair over the last 5 trading days, as of May 12, is 61 pips, which is "average." We expect the pair to trade between 1.1718 and 1.1842 on Tuesday. The upper channel of the linear regression has flattened, indicating a possible trend change to the upside. In fact, the upward trend for 2025 could have resumed a month ago. The CCI indicator has entered the overbought zone and formed two "bearish" divergences, signaling the start of a downward correction that is likely already complete.

Nearest Support Levels:

S1 – 1.1719

S2 – 1.1658

S3 – 1.1597

Nearest Resistance Levels:

R1 – 1.1780

R2 – 1.1841

R3 – 1.1902

Trading Recommendations:

The EUR/USD pair maintains an upward trend amid the weakening influence of geopolitics on market sentiment and a decline in geopolitical tensions. The global fundamental backdrop for the dollar remains extremely negative, so we still expect the pair to rise in the long term. If the price is positioned below the moving average, short positions can be considered with targets at 1.1658 and 1.1597 on technical grounds. Above the moving average line, long positions are relevant with targets at 1.1841 and 1.1902. The market continues to distance itself from geopolitical factors, and the dollar continues to lose its only growth factor.

Explanations for the Illustrations:

• Linear Regression Channels help identify the current trend. If both are pointing in the same direction, it indicates a strong trend.
• The Moving Average Line (settings 20,0, smoothed) indicates the short-term trend and the direction in which trading should currently proceed.
• Murray Levels serve as target levels for movements and corrections.
• Volatility Levels (red lines) indicate the likely price channel in which the pair will trade over the coming days, based on current volatility metrics.
• CCI Indicator: Its entry into the oversold area (below -250) or the overbought area (above +250) signifies that a trend reversal in the opposite direction is approaching.