Euro steadies as Middle East strikes offsets Fed repricing

• US strikes on Iran sour sentiment and lift crude prices.
• Fed minutes show officials favor shorter, less dovish guidance.
• Jobless claims and European inflation data drive next catalyst.

The Euro holds firm against the US Dollar on Wednesday as hostilities in the Middle East continued, with the US attacking Iran for the second straight day at around the Strait of Hormuz. At the time of writing, the EUR/USD trades at 1.1420, after bouncing off daily lows of 1.1391.

EUR/USD holds firm as Fed minutes, Hormuz strikes lift USD

The US Central Command revealed in a post that “At the direction of the Commander in Chief, US Central Command forces have started conducting additional strikes against Iran to further degrade their ability to threaten freedom of navigation in the Strait of Hormuz.”

The markets reacted immediately to the headline, as risk appetite soured, as depicted by US equity markets finishing Wednesday’s session with losses. Crude prices are registering a leg up, with Western Texas Intermediate (WTI), the US Oil benchmark, up 3.57% at $74.77.

Earlier, the Federal Reserve released the minutes of its last meeting, which showed that all officials voted unanimously to hold rates while acknowledging that the labour market is stable. Furthermore, most participants “preferred” not to use the previous dovish language and agreed to release a shorter monetary policy statement.

Regarding monetary policy, several participants commented that they don’t see it as restrictive, but a few others see it as slightly restrictive.

Meanwhile, money markets have priced in an 18% probability of a 50-basis-point (bps) rate increase in September, with a 25-bps hike at around 52%.

The US Dollar Index (DXY), which tracks the buck’s performance against six currencies, is up 0.10% at 101.20.

In Europe, the economic docket was light, with European Central Bank (ECB) officials crossing the wires. Joachim Nagel of the Bundesbank said, following Iran’s attacks, “we are back where we began,” and that the ECB should take a meeting-by-meeting approach. Meanwhile, ECB’s Primož Dolenc made comments about being unsure of what they, the central bank, will do in two weeks.

On Thursday, the US economic docket will feature Initial Jobless Claims data. Across the pond, Germany’s Trade Balance is eyed, ahead of the release of inflation figures in Germany and France.

EUR/USD Price Forecast: Technical outlook

In the daily chart, EUR/USD trades at 1.1416, extending its slide below the clustered moving averages, with the latest triple simple moving average group (50, 100, 200) around 1.1572 now acting as overhead supply. Price sits firmly inside a downward parallel channel, below its 1.1610 upper boundary, while the former resistance trend line break level at 1.1615 reinforces the bearish structure above spot. The Relative Strength Index (14) around 40 suggests persistent but not extreme selling pressure, aligning with the pair’s capped tone while it trades beneath all major trend indicators.

On the topside, initial resistance emerges near the lower boundary of the descending channel at 1.1437, where any rebound would first be challenged, before the triple SMA cluster around 1.1572 limits further recovery. Above that, the channel top at 1.1610 and the downtrend-line break level at 1.1615 form a dense barrier, while a stronger recovery would target the horizontal resistance zone at 1.1849. With no significant underlying support levels immediately below price in this dataset, the pair remains vulnerable to further downside as long as it holds under these layered resistances.

(The technical analysis of this story was written with the help of an AI tool. Know more.)