Today, Thursday, the EUR/USD currency pair continued its upward movement, benefiting from the weakness of the U.S. dollar.
The U.S. dollar continues to decline, coming under pressure from hopes for a peaceful resolution of the conflict between the United States and Iran, despite encouraging employment data. In particular, the ADP report showed that private-sector employment increased by 109,000 jobs in April, significantly above the revised figure of 61,000 recorded in the previous month. Nevertheless, this positive factor was offset by overall optimism regarding a potential agreement that could halt the conflict with Iran.
On Wednesday, U.S. President Donald Trump expressed confidence that negotiations had made significant progress over the past 24 hours, adding that Iran appears willing to reach a deal. In addition, Axios sources, citing two U.S. officials, reported that the White House is approaching the signing of a one-page memorandum of understanding with Iran aimed at resolving the conflict. These developments, together with the easing of hawkish sentiment regarding U.S. Federal Reserve policy, are undermining the dollar's position as a reserve currency while simultaneously supporting the EUR/USD pair.
However, according to the CME FedWatch tool from CME Group, traders are still pricing in the possibility of a Federal Reserve interest rate hike before the end of the year. In addition, investors are reassessing the likelihood of a peace agreement between Iran and the United States amid serious disagreements over Iran's nuclear program. This uncertainty is keeping traders on edge and could provide support for the U.S. dollar, calling for caution when opening risky bullish positions on the EUR/USD pair and when planning for further strengthening of the currency.
In the search for new market drivers, attention should be paid to macroeconomic data, particularly the Challenger report on U.S. job cuts, as well as weekly initial jobless claims data. However, the main focus should still remain on Friday's U.S. Nonfarm Payrolls (NFP) employment report. In addition, new developments related to the Middle East crisis may continue to generate volatility, which in turn will affect the dynamics of the U.S. dollar and create additional trading opportunities for the EUR/USD pair.
From a technical perspective, the oscillators remain positive, and the bulls hold the advantage, with the nearest target being the key psychological level of 1.1800. Support is provided by the 20-day SMA. It is also worth noting that the 200-day SMA is moving horizontally, which suggests that the pair may trade in a sideways range for an extended period.
