The EUR/USD currency pair traded quietly and calmly on Monday, with no signs of trouble—until Donald Trump took the stage and shocked the markets. The US President announced that "very good negotiations" had taken place with Tehran over the past few days, thus postponing his decision to strike Iranian energy infrastructure for five days. As a result, the dollar immediately plunged across the currency market, oil and gas prices fell, and Bitcoin surged upwards. Thank you, Mr. President! However, just half an hour later, Iranian officials reported that no negotiations were taking place with Washington and that Trump was simply afraid of retaliation for any strikes on energy infrastructure announced over the weekend. Recall that on Sunday, Tehran issued a statement asserting that if the US Air Force launched strikes against Iranian energy, it would immediately retaliate against all US allies in the Middle East. The strikes would not only target power plants but also water purification facilities and information technology assets (internet infrastructure). However, Trump continues to insist that the war will soon be over, that negotiations are ongoing, and that the conflict in the Middle East will cease shortly. Once again, it is appropriate to note a few characteristics common to all of Trump's actions. First, there's the TACO principle—"Trump Always Chickens Out." All traders are familiar with this principle, which reflects the US President's constant threats followed by retreats. Of course, it doesn't always work, but it often does. Second, Trump has once again (with a high degree of likelihood) made a statement that does not align with reality. Recall that during Trump's first term, many polling agencies specifically counted how many times a day he made false statements. They counted about 15... Third, as we mentioned earlier, Trump can declare a total victory of "good over evil" and withdraw from the game at any moment. Why not? Iranian missiles cannot physically reach America, and Iran's strikes against allies in the region are unlikely to seriously trouble the US leader. He attempted to eliminate the "Iranian nuclear threat" and execute a coup in Iran. That didn't work. Now it's time to announce complete victory and end the US participation in this war. By the way, the US Navy has already moved hundreds of kilometers away from the Persian Gulf. Therefore, whether the war continues or not, the US will no longer participate. The Strait of Hormuz will remain blocked until Iran decides to unblock it. And how much time that will take is anyone's guess. Most likely, Iran will now use the Strait of Hormuz to blackmail the world in order to lift as many sanctions as possible and gain as many concessions as possible. Notably, Europe may be interested in this.
The average volatility of the EUR/USD currency pair over the last 5 trading days, as of March 24, is 117 pips and is characterized as "average." We expect the pair to trade between 1.1478 and 1.1712 on Tuesday. The upper linear regression channel has turned sideways, indicating a trend reversal. The CCI indicator has re-entered oversold territory and formed a "bullish" divergence, once again signaling the potential end of the downward trend.
Analysis are provided by InstaForex.
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