EUR/USD: Inversion of the long moving average polarity

The renewed tensions in the Gulf, with the risk of widespread conflagration, do not encourage risk-taking in financial markets and contribute to rising crude oil prices. Consequently, the Euro resumed its decline against the Dollar, with the currency pair testing its 200-day moving average (in brown), a long-term trend line that is currently inverting downwards.

Yesterday marked the return of airstrikes in the region, with the United Arab Emirates announcing that it had been targeted by an Iranian drone attack and had intercepted cruise missiles. These were the first strikes by Tehran in over a month, further jeopardiding the truce. "These attacks represent a dangerous escalation and an unacceptable transgression," the Emirati Ministry of Foreign Affairs stated.

A senior Iranian military official yesterday denied that the US had destroyed six Iranian ships, after US forces announced they had shot down six Iranian vessels and intercepted missiles and drones launched by Iran.

"The US statement claiming to have sunk several Iranian warships is false," a senior Iranian military official was quoted as saying by state television.

Meanwhile, an Iranian media outlet reported that a US frigate was targeted by missile fire in the Strait of Hormuz. According to Fars, the ship was hit by two missiles near Jask Island after ignoring a warning from the Iranian navy. The ship reportedly turned back. The US military, however, denied that its ships had been struck.

Ben Jones, Global Head of Research, Strategy & Insights, and Ashley Oerth, Senior Investment Strategist, maintain that "the key indicator to monitor is the number of ships transiting the Strait of Hormuz. Forecast markets indicate a lower probability of a return to normal traffic levels by the end of June. The evolution and adaptation of other trade routes are also becoming increasingly important."

Romane Ballin, Bond Portfolio Manager at Auris Gestion: "The issue is no longer limited to a simple  supply disruption, but to the risk of a structural shock. Difficulties in exporting oil could lead to a complete shutdown of production at some wells. Such a situation is not insignificant: it can cause substantial damage, while restarting operations is generally a long and complex process. In parallel, the United Arab Emirates' decision to leave OPEC illustrates the country's desire to significantly increase its production, with a target of 5 million barrels per day (Mb/d) by 2027, compared to 3.4 Mb/d currently. However, the oil market has had little reaction to this announcement: while this increased supply raises long-term questions (potential pressure on prices...), the immediate challenge lies more in the transportation than the extraction of crude oil."

On the statistical front Thursday, there were no surprises regarding consumer prices in the Eurozone or PCE prices across the Atlantic, with figures in line with consensus. However, there was a positive surprise in the weekly jobless claims figures in the US, which fell below 200,000. Yesterday, there were no surprises in the final April data for the EU manufacturing PMI, which came in at 52.1. On the other hand, the reaction was slightly less severe than anticipated in the Sentix investor confidence index for the monetary union, at -16.3. This leading indicator of the economic health of the 21 member states remains firmly in negative territory. The key focus for today is the US ISM PMI and the JOLTS job openings report in the United States, both due at 16:00 (EU time).

Right now, the EUR/USD is trading at $1.1689.

KEY TECHNICAL ELEMENTS
From a technical perspective, the euro/dollar pair is now encountering a pivotal zone. After recovering much of its decline related to the acute phase of the conflict, it is trading near the upper boundary of its range. This configuration reflects a compression of volatility and marked hesitation among market participants, who are currently unable to trigger a sustained upward move. In the absence of a clear catalyst - whether macroeconomic, monetary, or geopolitical - the pair remains contained below this major resistance level ($1.1825), in a wait-and-see phase that could lead to a more directional move once this equilibrium is broken.

MEDIUM-TERM FORECAST
Based on the key technical factors mentioned above, our medium-term outlook for the EUR/USD is neutral.

We will maintain this neutral outlook as long as the EUR/USD exchange rate remains between the support level at $1.1608 and the resistance level at $1.1765.