The EUR/USD currency pair remains fairly calm, trading firmly within reach of the 1.1500 mark today. It did manage to recover from hitting a weekly low of 1.1474 on Tuesday. This resilience is notable considering an increasing risk aversion underlying a bid for the US Dollar (USD). Escalating conflict in the Middle East, along with continued global trade uncertainty, are breeding pessimism among investors.
Recent events concerning former President Donald Trump have heightened these stresses. This is particularly the case when considering the current conflict between Israel and Iran. Things further deteriorated with daily missile strikes exchanged between the two countries. Yet, on his part, Trump just announced that he’s “not in the mood to negotiate.” This announcement raises concerns that the US may directly intervene in the conflict. It introduces even more chaos to an already unpredictable market.
Economic factors are extremely important drivers when it comes to creating the market landscape. US Department of Labor Initial Jobless Claims increased again. They jumped up to 245,000 for the week ending June 14. This figure is in line with the market. It is also a notable drop from last week’s revised 250,000 claims. That kind of labor market data matters a lot to investors and helps shape currency valuations.
Aside from geopolitical tensions, Trump has made no secret of his disdain for ongoing international trade negotiations. In particular, he attacked Japan for being overly aggressive in negotiations. He was very vocal about his disappointment with the European Union, alleging that they have yet to provide him with a decent proposal. Such comments add to the climate of confusion that has an immediate effect on the forex market.
Zooming out technically on the EUR/USD pair indicates a general absence of strong directional conviction. The daily chart above shows bears are still pushing the clear downtrend on the pair. It is still hovering under the mildly bearish 20-day simple moving average (SMA). It’s maintaining back above the 100 and 200 SMAs. This represents an aggressive supportive level that may put a firm short term floor under the currency pair.
The dance of geopolitical events and economic data makes for an interesting backdrop for the futures and stock traders and investors. With wars raging in the Middle East and big trade deals still undone, hard-headed market players are set to stay jittery. The continued brutal missile assault and Trump’s statements make the joint future of the USD and EUR less certain than ever.