Euro slips as Hormuz firefight revives US Dollar demand

• US-Iran strikes near Hormuz revive haven demand for US Dollar.
• Consumer confidence beats estimates, but spending anxiety keeps rising.
• ECB hike bets grow, though recession risks cloud outlook.

The Euro loses ground during the North American session amid rising tensions in the Middle East, as the US and Iran exchanged fire near the Strait of Hormuz, while negotiations continued. At the time of writing, the EUR/USD trades at 1.1622, down 0.15%.

Euro weakens as Iran tensions offset softer oil prices

Iran revealed that the US violated the ceasefire as the United States conducted defensive strikes in southern Iran, after Trump revealed that negotiations with Tehran would extend. Meanwhile, US Secretary of State Marco Rubio revealed that reaching a deal could “take a few days,” pouring cold water on a rapid resolution of the conflict.

The Greenback is staging a recovery on Monday as depicted by the US Dollar Index (DXY). The DXY, which tracks the buck’s value against a basket of six currencies, is up 0.21% at 99.21, a headwind for the shared currency.

Conversely, Oil prices continued to tumble as WTI, the US crude Oil benchmark, fell by 2.75% to $94.34 per barrel. Inflation concerns had tempered, as reflected in US Treasury yields, with the most sensitive to interest rates, the 2-year note, falling nearly 4 basis points to 4.074%.

Data from the US revealed that the cost of living is taking a toll on households. Conference Board (CB) Consumer Confidence in May slipped amid broadening inflation, with the Index falling to 93.1, exceeding economists' estimates of 92, according to Bloomberg’s poll.

The survey revealed anxiety amongst consumers, with two-thirds cutting back on spending, blaming higher prices.

Across the pond, the Eurozone docket was absent, yet ECB member Isabel Schnabel said that they should raise rates in June, despite Iran agreeing to a peace deal.

A Reuters poll showed that 85% of the economists polled expect a rate increase at June’s meeting, yet were cautious about money markets' views on rates. If the ECB tighten policy aggressively, it could push the Eurozone into a recession, as economic growth in Q1 2026 eased from last year's Q4 1.3% to 0.8% YoY.

Later this week, the U.S. economic calendar will include housing data, durable goods orders, the second estimate of first-quarter 2026 GDP, labor market figures, and the Fed’s preferred inflation measure, the core Personal Consumption Expenditures (PCE) Price Index.

EUR/USD Price Forecast: Technical outlook

In the daily chart, EUR/USD trades at 1.1618, holding below the grouped 50-, 100- and 200-day simple moving averages (SMAs) clustered around 1.1659, which keeps the near-term bias mildly bearish. Price is hovering just above the former breakout area around the upward support trend line at 1.1576, while the Relative Strength Index (14) near 43 suggests subdued bearish momentum rather than oversold conditions, hinting that sellers still retain the initiative but lack strong acceleration.

On the topside, initial resistance is provided by the triple simple moving average cluster near 1.1659, with a subsequent barrier at the descending resistance trend line projected from the 1.1812 break zone. On the downside, the first important support is the rising trendline break level at 1.1576, and a clear loss of this floor would expose deeper weakness toward the older structural support defined by the prior downward trendline break near 1.1265.

(The technical analysis of this story was written with the help of an AI tool.)