EUR/USD: Antagonistic forces are restraining the pair

On the EUR/USD pair, the system is in immediate equilibrium, but the forces present are important. On the one hand, pressure is being exerted on the single currency, one of the most reliable barometers of risk appetite on financial markets. And on the other hand, the green note also suffered from an intense pressure force due to its decorrelation mechanics with the barrel price, sharply rising after the embrace of the geopolitical situation in the Middle East.

"The outbreak of a military conflict between Israel and Iran weighs significant uncertainty on the global economy and financial markets, as evidenced by recent volatility movements on bond, equities, energy and foreign exchange markets," explains Kim Catechis, head of strategy of investment for the Franklin Templeton Institute.

"Investors rightly fear that the conflict will spread, jeopardising global energy supplies and disrupting major international transportation routes, which would add to other sources of geoeconomic uncertainty. One of the main concerns is the possibility that oil prices would drive a return to high inflation. Nevertheless, [...] we estimate the risk of a return to 1970s-type inflation, provoked by rising oil prices, remains relatively low."

And it is indeed on the question of price dynamics that will undoubtedly carry the questions at the Fed press conference at 20:30 (EU time), at the close of the FOMC (Monetary Policy Council). On the rates proper, a status quo is very broadly expected.

Yesterday the spotlight was essentially turned on sacrosanct American consumption. On a monthly basis, these retail sales, a no more direct measure of the appetite of the US consumer, slipped 0.9%, versus -0.1% the previous month and -0.5% consensus.

"The May retail sales report confirms that default is setting in among consumers. Beyond sharp variations of recent months, which explain themselves by volatility in car sales caused by tariff announcements, household consumption is without real trend. As for the market of labour, the developments are not negative enough to move the Fed but they are enough for it to remain alert," comments Bastien Drut, Head of Strategy and Economic Studies.

Earlier in the day, the ZEW index of confidence in the Eurozone's premier economic powerhouse was very pleasantly surprised. The index of the eponymous institute flambed from 25.1 to 47.6 points this month.

"Confidence is recovering. In June 2025, the ZEW indicator registers a new tangible improvement. Recent growth in investment and consumer demand has contributed there. This evolution also seems to comfort the view that budgetary policy measures announced by the new German government can stimulate the economy Coupled with recent ECB interest rate cuts, these measures could put an end to the economic stagnation in Germany, which has lasted for nearly three years," comments ZEW President Achim Wambach.

This Wednesday, exchangers will track the level of weekly enrollments to unemployment benefits across the Atlantic, expected at 247,000.

Right now, the EUR/USD is trading at $1.1513.

KEY CHART ELEMENTS
On Thursday the spot broke free of a resistance area at $1.1460, an area that is already being tested early, in the form of a pullback this Friday. The absence of bullish expansion after the $1.1460 franking casts doubt as to the spot's ability to continue in the coming weeks its upward move from the bottom. The test of the 50-day moving average (in orange) will therefore be essential.

MEDIUM TERM FORECAST
In view of the key graphical factors we have mentioned, our view is neutral to medium term on the EUR/USD.

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.1460 and resistance at $1.1674.