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19.05.202600:55 Analisis Forex & Kajian: EUR/USD: Iran, Oman, and the US: The Market at a Geopolitical Crossroads

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Will the EUR/USD pair return to the 17-18 figure range, or will the next intermediate stop be the support level of 1.1570 (the lower boundary of the Kumo cloud on the D1)? Can we trust long positions, or is it more prudent to use corrective spikes as an opportunity to open short positions? These are by no means trivial questions, considering the conflicting signals coming from the US and Iran. Essentially, the direction of the EUR/USD movement will depend on how events in the Middle East unfold. All other fundamental factors are secondary.

Exchange Rates 19.05.2026 analysis

The situation surrounding the negotiations between Washington and Tehran is currently in a phase of "diplomatic bargaining amid a fragile ceasefire." The parties have exchanged drafts of peace agreements, but none of the options has been acceptable to both sides. In particular, on Sunday, the Iranian news agency Fars News, citing unofficial sources, reported that the United States allegedly rejected all Iranian demands (including the lifting of sanctions, a cessation of hostilities "on all fronts," and the return of all frozen assets).

However, on Monday, the official representative of Iran's Foreign Ministry, Esmail Baghaei, effectively denied this information, calling such reports speculation. At the same time, he made it clear that Iran's right to peaceful uranium enrichment is not subject to negotiation. As for the fate of the Strait of Hormuz, Baghaei stated that Iran is currently in talks with Oman "to develop a new mechanism for regulating shipping in the region."

On Monday, another insider emerged, this time of a more encouraging nature. According to the Tasnim agency, Tehran has conveyed a new 14-point peace proposal through Pakistani intermediaries. According to a source close to the negotiating team, the new initiative "focuses on issues of ending the war and confidence-building measures." However, the specific conditions of the proposal remain unknown.

In turn, Donald Trump stated in a phone conversation with reporters from Axios that Tehran, in his opinion, "wants to make a deal," so Washington is awaiting an updated Iranian proposal, "which will certainly be better than the previous one."

There is also media reporting that the US may soon suspend enforcement of oil sanctions against Iran during the negotiations.

All of this represents one side of the coin. These encouraging signals have allowed buyers of EUR/USD to organize a corrective price pullback to the mid-16 figure range.

However, there is another side to the coin. There are more troubling insights indicating that the risks of escalation in the Middle East remain high.

According to information from Reuters, The Guardian, and several other leading global media outlets, the White House has requested updated military options from the Pentagon regarding the "Iranian case" amid stalled negotiations. Informed sources indicate that several scenarios are "on the table for discussion": limited airstrikes against military targets, strikes against remaining Iranian infrastructure (including a potential renewal of attacks on IRGC logistical hubs), as well as a resumption of maritime operations (escort of tankers in the Strait of Hormuz by US Navy forces). Notably, one option does not exclude the others—meaning a combined force scenario is also possible.

It is also important to note that the level of tension in the Middle East has risen significantly due to several incidents. For instance, on May 17, a strike drone attacked the Barakah nuclear power plant in the United Arab Emirates. As a result of the attack, an external generator caught fire, and UAE representatives labeled the incident as a "dangerous escalation," placing the blame on Iran or its proxies. In turn, Riyadh reported intercepting three attack drones launched from Iraq (where pro-Iranian groups operate) aimed at Saudi territory.

It is noteworthy that there were no such incidents in the region during the preceding weeks.

According to Axios, a discussion of military scenarios is scheduled for Tuesday, May 19, in the White House Situation Room. Following this meeting, Trump may decide to renew military actions in the Middle East.

Thus, the situation is truly at a crossroads: on one side, there are signals of ongoing negotiations and attempts to maintain a diplomatic channel; on the other side, there are signs of preparations for potential escalation. In which direction the scales will tip will become evident very soon.

Given the high uncertainty and rising geopolitical risks, it is advisable to maintain a wait-and-see stance on the EUR/USD pair until clearer fundamental signals emerge. Depending on Trump's further decisions, the pair may either return to the 17 figure range or test the key support level at 1.1570.

* Analisis pasaran yang disiarkan di sini adalah bertujuan untuk meningkatkan kesedaran anda, tetapi tidak untuk memberi arahan untuk membuat perdagangan.

Irina Manzenko,
Analytical expert of InstaSpot
© 2007-2026
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