Fresh US military strikes against Iran have significantly impacted global market sentiment. The US Central Command announced that, under the direction of the Commander in Chief, forces have initiated additional strikes to diminish threats to freedom of navigation in the Strait of Hormuz. Markets reacted instantly to this development, with US equity markets closing Wednesday’s session in negative territory. Crude oil prices have seen an upward move, with Western Texas Intermediate (WTI) rising 3.57% to trade at $74.77.
Federal Reserve Policy and Market Expectations
Regarding monetary policy, participants in the latest Federal Reserve discussions remained divided on whether current settings are sufficiently restrictive. Some officials noted that they do not see the policy as overly tight, while a minority described it as slightly restrictive. Money markets currently indicate an 18% probability of a 50-basis-point (bps) rate hike in September, with the likelihood of a 25-bps increase sitting at approximately 52%. The US Dollar Index (DXY), which measures the greenback against a basket of six currencies, is up 0.10% at 101.20.
European Central Bank Perspectives
In Europe, the economic docket remained quiet, though comments from European Central Bank (ECB) officials provided some clarity. Joachim Nagel of the Bundesbank stated that, following Iran's attacks, we are back where we began and suggested the ECB adopt a meeting-by-meeting approach. Meanwhile, the ECB’s Primož Dolenc expressed uncertainty regarding the central bank’s specific actions in the coming two weeks.
EUR/USD Technical Analysis
The EUR/USD pair is currently trading at 1.1416. Live market data shows the price at 1.14, up 0.15% from the previous close. The pair continues to trade below clustered moving averages, with the triple simple moving average (SMA) group at 1.1572 acting as overhead supply. Prices remain firmly within a descending parallel channel, beneath the 1.1610 upper boundary. A former resistance break at 1.1615 further reinforces the bearish structure. The Relative Strength Index (14) at 42 indicates persistent selling pressure. On the upside, initial resistance is near the 1.1437 lower boundary, while a recovery beyond that is capped by the 1.1572 SMA cluster. Without significant support levels immediately below, the pair remains vulnerable to further downside.
Broader Market Movements
On Wednesday, GBP/USD accelerated its advance, surpassing the key 1.3400 barrier to clinch new multi-week highs. This rise in Cable was supported by renewed selling interest in the greenback, despite ongoing geopolitical tensions. Gold also regained composure, bouncing off earlier lows to shift focus toward the $4,100 per troy ounce mark. Policymakers at major central banks, including the Federal Reserve, the ECB, and the Bank of England, are increasingly moving away from explicit forward guidance, leaving traders to navigate an environment of heightened uncertainty.
