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EUR/USD tests support near 1.1390 as Middle East tensions rise

Action Forex notes the Fed minutes kept a broadly hawkish tone for the dollar, while renewed US-Iran tensions raise energy and inflation uncertainty.

Reported · Written up by our desk · Major Pairs

European currencies are trying to stabilize after a recent decline, with sentiment split as investors digest the Federal Reserve’s latest meeting minutes and renewed geopolitical risk, Action Forex reported.

The Fed minutes pointed to concern about persistent inflation, with some policymakers backing the idea of an immediate rate increase, while most favored a more cautious approach to further tightening. The document also reflected division inside the Fed over the path of interest rates, but it preserved a broadly hawkish backdrop for the US dollar, since additional rate hikes were not ruled out if inflation stays elevated.

Fresh uncertainty has also come from renewed tensions in the Middle East, after an escalation between the United States and Iran prompted investors to refocus on the possibility of a wider regional conflict. That raises concerns about potential disruptions to energy supplies through key shipping routes, which could push energy prices higher and complicate the Fed’s prospects for policy easing, the outlet said.

In trading, EUR/USD tested support around 1.1390 and buyers have held it above June lows, though Action Forex said the technical picture remains fragile. The pair could recover toward 1.1450 to 1.1470 if it finds acceptance, but rejection and a failure to hold above that area could bring renewed downside toward 1.1330 to 1.1350.

GBP/USD meanwhile has outperformed, extending its recovery after rebounding from the 1.3160 to 1.3200 support zone. Sterling has moved back toward 1.3400, and Action Forex said a sustained move above 1.3400 could open the way for gains toward 1.3460 to 1.3500, while a decisive break below 1.3320 would undermine the bullish view.

Latest closeEUR/USD 1.139 ▼0.1%|GBP/USD 1.329 ▼0.5%

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