21.05.202603:30 Forex Analysis & Reviews: EUR/USD Overview. May 21. "The Conflict with Iran Is Nearing Completion"

The EUR/USD currency pair continued its downward movement on Wednesday, with volatility remaining low. Over the past 10 days, the euro has moved by only 70 pips. Clearly, the market is in no rush. And why should it be, when geopolitical factors can sway in any direction at any moment? The market wants to avoid risk, but being in a risky position is undesirable as well. Thus, we have been witnessing restrained purchases of the U.S. dollar for a month now, just in case, to avoid excesses.

This week, Donald Trump once again extended a reprieve to Iran. On Monday, the American president talked about very important negotiations involving the UAE, Qatar, Saudi Arabia, and Iran. The White House leader stated that these negotiations have a chance of success, which is why he decided to postpone new strikes against Iran "for a few days." Essentially, the American president has once again employed the TACO principle. We believe that the U.S. is intentionally delaying the implementation of Trump's threats, as the U.S. itself has no need for the renewal of war. Therefore, Trump may postpone new attacks on Iran five more times, citing Qatar, Bahrain, China, or New Zealand at his discretion. We do not believe that the escalation of the conflict is predetermined, but it is clear that Washington is not seeking it.

Meanwhile, Iran, which has been "on the verge of signing a peace agreement and renouncing nuclear weapons for a whole month," has stated that in the event of renewed attacks against it, a local war would turn into a global one. Tehran promised that if new aggression occurs, strikes would be directed at targets outside the "hot region." Thus, on Wednesday, we heard more bellicose statements. However, Tehran did not comment on whether negotiations were underway with Qatar and Saudi Arabia. Perhaps because there are no negotiations at all, or they are doomed to failure from the start, at least from Tehran's perspective.

Therefore, we remain extremely skeptical about a possible agreement between Iran and the U.S. Washington has boxed itself into a corner. It has failed to achieve its goals by military means. If it continues pursuing its objectives, it will incur enormous losses and push the war beyond the Middle East. Iran has not surrendered and will not surrender; this is clear to all. A new war is not needed for Trump, as his approval ratings have already dropped to record lows during both of his terms. This is exactly why Trump continuously delays the launch of new strikes. However, even new strikes will change nothing. They will only further worsen the global situation regarding energy resources, as Iran will surely continue to target energy and oil infrastructure, realizing that this is the path to its own salvation. Washington started the war, and Iran is making it so that the whole world finds itself hostage to its decisions. Essentially, Tehran is broadcasting a message to the world: "Subdue Trump, or oil will cost $200 a barrel."

The average volatility of the EUR/USD currency pair over the last 5 trading days as of May 21 is 60 pips, which is considered "average." We expect the pair to trade between 1.1564 and 1.1684 on Thursday. The upper channel of the linear regression has turned upward, indicating a change in trend to bullish. In fact, the upward trend of 2025 could have resumed a month ago. The CCI indicator entered the overbought area and formed two "bearish" divergences, signaling the start of a downward correction that is still underway.

Nearest Support Levels:

• S1 – 1.1597
• S2 – 1.1536
• S3 – 1.1475

Nearest Resistance Levels:

• R1 – 1.1658
• R2 – 1.1719
• R3 – 1.1780

Trading Recommendations:

The EUR/USD pair continues its downward movement, which is presumed to be a correction within a global upward trend. The global fundamental backdrop for the dollar remains extremely negative, and only geopolitical factors regularly support it. When the price is below the moving average, short positions can be considered, with targets at 1.1564 and 1.1536. Above the moving average line, long positions are relevant with targets of 1.1780 and 1.1841. The market continues to move away from geopolitical factors, but last week was disappointing for the euro currency. We do not expect a stronger decline for now, but no one knows how relations between Iran and the U.S. will evolve moving forward.

Explanations for the Illustrations:

• Linear Regression Channels: Help define the current trend. If both are directed in the same direction, it indicates a strong trend.
• Moving Average Line (settings 20,0, smoothed): Determines the short-term trend and direction in which trading should be conducted.
• Murray Levels: Target levels for movements and corrections.
• Volatility Levels (red lines): Likely price channel where the pair will trade in the coming days based on current volatility metrics.
• CCI Indicator: Its entrance into the oversold zone (below -250) or the overbought zone (above +250) indicates that a trend reversal is approaching in the opposite direction.