The EUR/USD currency pair continued to trade calmly on Thursday. Traders should not be disturbed by the fact that the pair has only been declining this week. Firstly, its losses are minimal. Secondly, the decline is clearly occurring within the framework of a correction. Thirdly, the key factor supporting the US dollar in 2026 has almost been neutralized. It has been neutralized not because the conflict in the Middle East is over or will not resume, but simply because of expiration timelines. Let us remember that geopolitics is a powerful influencing factor in the currency market, but conflicts are usually prolonged. It is hard to imagine that another war in today's turbulent world, lasting several years, will be a determining factor for the movement of the dollar or euro throughout the entire period of hostilities.

Essentially, no positive developments have been observed since the establishment of a temporary ceasefire. And it has already been five full weeks since then. It has been a considerable amount of time to at least sign a memorandum of understanding or a temporary agreement. However, the parties continue to bombard each other with ultimatums, so negotiations have not shifted an inch. It turns out that five full weeks have been wasted, and Tehran and Washington have not moved even a centimeter closer to unlocking the Strait of Hormuz.

And if the situation remained as it is, that would not be the worst scenario. Few people now believe in the Strait's unblocking. A new acronym, NACHO, has even emerged, standing for "Not A Chance Hormuz Opens." However, the longer negotiations remain stalled, the higher the likelihood of escalation into war. Let us recall that Donald Trump initiated military operations in Iran with one goal in mind: to achieve complete denuclearization. If that goal is not achieved (and it has not been), Trump will be asked by all of America why this war was even necessary, which led to soaring inflation and wild increases in the prices of oil, gas, and fuel.

Of course, Trump will announce the "Iranian nuclear threat," but not many believe him anymore. He could just as easily announce a nuclear threat from Malaysia at any moment. The possibility of enriching uranium exists in many countries around the world; that does not mean that each of them intends to strike American cities. So, there is no victory – there are no votes in the upcoming elections. Trump understands this, so he may resume the war to pressure Iran. Unfortunately, in our view, this is the most likely scenario, as we do not see the conflicting parties moving closer to an agreement. Moreover, yesterday, Iranian Foreign Minister Abbas Araghchi posted an angry message on X, calling on the world to "put an end to American despotism." Not the most peaceful rhetoric if Tehran were genuinely striving for a peaceful deal. However, Trump's rhetoric is no better...

The average volatility of the EUR/USD currency pair over the last 5 trading days, as of May 15, is 54 pips and is characterized as "average." We expect the pair to trade between 1.1624 and 1.1732 on Friday. The upper linear regression channel has turned upward, indicating a trend change to bullish. In fact, the upward trend of 2025 could have resumed a month ago. The CCI indicator has entered the overbought zone and formed two bearish divergences, signaling the start of a downward correction.

Nearest support levels:

S1 – 1.1658

S2 – 1.1597

S3 – 1.1536

Nearest resistance levels:

R1 – 1.1719

R2 – 1.1780

R3 – 1.1841

Trading Recommendations:

The EUR/USD pair continues to maintain an upward trend amid the weakening influence of geopolitics on market sentiment and a reduction in geopolitical tension. The overall fundamental backdrop for the dollar remains extremely negative, so in the long term, we still expect the pair to rise. If the price is below the moving average, shorts can be considered with targets at 1.1658 and 1.1624 on technical grounds. Above the moving average line, long positions are relevant with targets of 1.1841 and 1.1902. The market continues to move away from geopolitical factors, while the dollar continues to lose its only growth driver.

Explanations for the Illustrations:

• Linear Regression Channels help identify the current trend. If both are pointing in the same direction, it indicates a strong trend.
• The Moving Average Line (settings 20,0, smoothed) indicates the short-term trend and the direction in which trading should currently proceed.
• Murray Levels serve as target levels for movements and corrections.
• Volatility Levels (red lines) indicate the likely price channel in which the pair will trade over the coming days, based on current volatility metrics.
• CCI Indicator: Its entry into the oversold area (below -250) or the overbought area (above +250) signifies that a trend reversal in the opposite direction is approaching.