EUR/USD: Blockage of the Ormuz detroit, a credible scenario?

While the target barrel approaches $75 for WTI, due to the war between Israel and Iran, the single currency, as a barometer of risk appetite on financial markets, pursued its consolidation move in the immediate vicinity of an important technical area: the $1.1460.

Donald Trump, through the White House spokesman, is given two weeks during which the possibility of a direct US military intervention in Iran could eventually materialize.

"For markets, the question is to know how extensive the US engagement in the Israeli-Iranian conflict will be. Hence the fragility observed [Wednesday]. For now, it's limited to providing strategic intelligence to the Israeli government and aircraft transfers military, notably bombers, in the Gulf bases and especially in Diego Garcia There is more fear than evil, so far Many investors fear the blockade of the Strait of Hormuz does not seem credible GPS and GNSS (satellite navigation) in the area, with very mitigated success Only two merchant ships would encounter difficulties Traffic is fluid and normal, as evidenced by satellite imagery."

This "temporarizing" of Trump willing to leave himself a possibility of negotiation, coupled with this fluidity of traffic in the Strait of Hormuz, prevents for the moment any flamboyance of the crude, which remains firm but unpacked by the buyer camp. The Euro consequently holds its positions relative to the green note.

The strategy adviser even goes so far as to push the reasoning on his terms, namely in the event Tehran carries out its threat to block the Strait of Hormuz.

"Alternatives exist to pipeline oil, notably Saudi Arabia's 1200-km East-West pipeline, which connects the oil fields of the eastern province to the port of Yanbu on the Red Sea. Around 500,000 barrels per day currently transit ? ten times less than its total capacity. Consequently, nil need to pass through the strait in case of blockage".

"The May retail sales report confirms default is setting in among consumers. Beyond the sharp fluctuations of recent months, which explain themselves by volatility in car sales caused by tariff announcements, household consumption is without real trend. As for the labor market, 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.

Right now, the EUR/USD is trading at $1.1511.

KEY CHART ELEMENTS
On Thursday 12 June 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. In the immediate, a pursuit of amplitudeless oscillations, in lateral technical camisole, is envisioned.

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.