The EUR/USD exchange rate experienced a significant decline last week due to escalating geopolitical tensions in the Middle East and strong employment figures from the United States.
This led to a surge in the value of the dollar as investors sought safety in the currency. The turmoil also caused a sharp increase in oil prices. The release of the US employment report further boosted the dollar, as job creation figures exceeded expectations and the unemployment rate dropped unexpectedly. These strong indicators have changed market expectations regarding Federal Reserve interest rate cuts.
From a technical perspective, the EUR/USD pair has broken through a critical level, indicating a bearish reversal. The outlook for the currency pair is negative, with key support levels identified. Geopolitical developments in the Middle East and upcoming inflation figures will be crucial in shaping the future trajectory of the EUR/USD exchange rate.
Despite the current bearish sentiment, the long-term outlook for the euro remains positive. The interplay between economic data and currency movements will continue to be important. The ability of central banks to manage inflation and economic growth will determine the future strength of the euro against the dollar.