EUR/USD Recovers as Dollar Weakens on Middle East Optimism

EUR/USD is trying to recover as easing Middle East tensions reduce demand for the US dollar. Reports of a possible 60-day ceasefire and nuclear negotiations between the U.S. and Iran have improved market sentiment, pushing oil prices lower and weakening the dollar’s safe-haven appeal.

At the same time, the latest US PCE inflation data came in slightly softer than expected, showing inflation pressures may be moderating. However, the data was not weak enough to significantly change Federal Reserve expectations, with markets still expecting rates to remain steady for now.

This combination of lower geopolitical risk and a softer dollar is helping support buying pressure in EUR/USD. Technically, the pair remains supported by a bullish trendline that has held since March, although momentum indicators like RSI and MACD still point to a neutral and indecisive market.

Key resistance remains at 1.1780, while 1.1680 is the main near-term support and neutrality zone near the moving averages. A break below 1.1590 could shift momentum back in favour of sellers.

EUR/USD Daily Chart